Correlation Between Samsung Electronics and Axfood AB
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Axfood AB 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 Axfood AB 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 Axfood AB, you can compare the effects of market volatilities on Samsung Electronics and Axfood AB 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 Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Axfood AB.
Diversification Opportunities for Samsung Electronics and Axfood AB
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Axfood is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB 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 Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Axfood AB go up and down completely randomly.
Pair Corralation between Samsung Electronics and Axfood AB
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Axfood AB. In addition to that, Samsung Electronics is 2.81 times more volatile than Axfood AB. It trades about -0.1 of its total potential returns per unit of risk. Axfood AB is currently generating about -0.08 per unit of volatility. If you would invest 24,040 in Axfood AB on September 4, 2024 and sell it today you would lose (485.00) from holding Axfood AB or give up 2.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Axfood AB
Performance |
| Timeline |
| Samsung Electronics |
| Axfood AB |
Samsung Electronics and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Axfood AB
The main advantage of trading using opposite Samsung Electronics and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB's long position.| Samsung Electronics vs. MTI Wireless Edge | Samsung Electronics vs. Ecclesiastical Insurance Office | Samsung Electronics vs. Pets at Home | Samsung Electronics vs. Norwegian Air Shuttle |
| Axfood AB vs. Samsung Electronics Co | Axfood AB vs. Samsung Electronics Co | Axfood AB vs. Hyundai Motor | Axfood AB 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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