Correlation Between Samsung Electronics and United Parcel
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and United Parcel 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 United Parcel 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 United Parcel Service, you can compare the effects of market volatilities on Samsung Electronics and United Parcel 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 United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and United Parcel.
Diversification Opportunities for Samsung Electronics and United Parcel
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and United is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service 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 United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and United Parcel go up and down completely randomly.
Pair Corralation between Samsung Electronics and United Parcel
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 2.65 times more return on investment than United Parcel. However, Samsung Electronics is 2.65 times more volatile than United Parcel Service. It trades about 0.0 of its potential returns per unit of risk. United Parcel Service is currently generating about -0.06 per unit of risk. If you would invest 86,500 in Samsung Electronics Co on August 26, 2024 and sell it today you would lose (900.00) from holding Samsung Electronics Co or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. United Parcel Service
Performance |
| Timeline |
| Samsung Electronics |
| United Parcel Service |
Samsung Electronics and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and United Parcel
The main advantage of trading using opposite Samsung Electronics and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel'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 |
| United Parcel vs. Samsung Electronics Co | United Parcel vs. Samsung Electronics Co | United Parcel vs. Hyundai Motor | United Parcel vs. Toyota Motor Corp |
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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