Correlation Between Samsung Electronics and SM Energy
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and SM Energy 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 SM Energy 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 SM Energy Co, you can compare the effects of market volatilities on Samsung Electronics and SM Energy 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 SM Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and SM Energy.
Diversification Opportunities for Samsung Electronics and SM Energy
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Samsung and 0KZA is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and SM Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Energy 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 SM Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Energy has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and SM Energy go up and down completely randomly.
Pair Corralation between Samsung Electronics and SM Energy
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the SM Energy. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.59 times less risky than SM Energy. The stock trades about -0.01 of its potential returns per unit of risk. The SM Energy Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,464 in SM Energy Co on August 29, 2024 and sell it today you would earn a total of 991.00 from holding SM Energy Co or generate 28.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.17% |
| Values | Daily Returns |
Samsung Electronics Co vs. SM Energy Co
Performance |
| Timeline |
| Samsung Electronics |
| SM Energy |
Samsung Electronics and SM Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and SM Energy
The main advantage of trading using opposite Samsung Electronics and SM Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, SM Energy 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 SM Energy will offset losses from the drop in SM Energy's long position.| Samsung Electronics vs. Ondine Biomedical | Samsung Electronics vs. Europa Metals | Samsung Electronics vs. Lendinvest PLC | Samsung Electronics vs. Neometals |
| SM Energy vs. Naturhouse Health SA | SM Energy vs. Induction Healthcare Group | SM Energy vs. Omega Healthcare Investors | SM Energy vs. Gaming Realms plc |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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