Correlation Between Samsung Electronics and SEB SA
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and SEB SA 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 SEB SA 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 SEB SA, you can compare the effects of market volatilities on Samsung Electronics and SEB SA 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 SEB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and SEB SA.
Diversification Opportunities for Samsung Electronics and SEB SA
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Samsung and SEB is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB SA 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 SEB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEB SA has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and SEB SA go up and down completely randomly.
Pair Corralation between Samsung Electronics and SEB SA
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the SEB SA. In addition to that, Samsung Electronics is 1.63 times more volatile than SEB SA. It trades about -0.05 of its total potential returns per unit of risk. SEB SA is currently generating about -0.05 per unit of volatility. If you would invest 9,671 in SEB SA on September 12, 2024 and sell it today you would lose (216.00) from holding SEB SA or give up 2.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Samsung Electronics Co vs. SEB SA
Performance |
| Timeline |
| Samsung Electronics |
| SEB SA |
Samsung Electronics and SEB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and SEB SA
The main advantage of trading using opposite Samsung Electronics and SEB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, SEB SA 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 SEB SA will offset losses from the drop in SEB SA's long position.| Samsung Electronics vs. Norwegian Air Shuttle | Samsung Electronics vs. GreenX Metals | Samsung Electronics vs. AMG Advanced Metallurgical | Samsung Electronics vs. Gaztransport et Technigaz |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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