Correlation Between Samsung Electronics and Humana
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Humana at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Samsung Electronics and Humana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Humana Inc, you can compare the effects of market volatilities on Samsung Electronics and Humana and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Samsung Electronics with a short position of Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Humana.
Diversification Opportunities for Samsung Electronics and Humana
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Humana is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and Samsung Electronics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Samsung Electronics Co are associated (or correlated) with Humana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humana Inc has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Humana go up and down completely randomly.
Pair Corralation between Samsung Electronics and Humana
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.75 times more return on investment than Humana. However, Samsung Electronics Co is 1.34 times less risky than Humana. It trades about -0.01 of its potential returns per unit of risk. Humana Inc is currently generating about -0.03 per unit of risk. If you would invest 99,400 in Samsung Electronics Co on August 26, 2024 and sell it today you would lose (13,800) from holding Samsung Electronics Co or give up 13.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.54% |
| Values | Daily Returns |
Samsung Electronics Co vs. Humana Inc
Performance |
| Timeline |
| Samsung Electronics |
| Humana Inc |
Samsung Electronics and Humana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Humana
The main advantage of trading using opposite Samsung Electronics and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Humana can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Humana will offset losses from the drop in Humana's long position.| Samsung Electronics vs. Toyota Motor Corp | Samsung Electronics vs. SoftBank Group Corp | Samsung Electronics vs. OTP Bank Nyrt | Samsung Electronics vs. Las Vegas Sands |
| Humana vs. CAP LEASE AVIATION | Humana vs. Cairn Homes PLC | Humana vs. Martin Marietta Materials | Humana vs. Ecclesiastical Insurance Office |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the CEOs Directory module to screen CEOs from public companies around the world.
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