Correlation Between Samsung Electronics and X FAB
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and X FAB 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 X FAB 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 X FAB Silicon Foundries, you can compare the effects of market volatilities on Samsung Electronics and X FAB 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 X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and X FAB.
Diversification Opportunities for Samsung Electronics and X FAB
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and 0ROZ is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and X FAB go up and down completely randomly.
Pair Corralation between Samsung Electronics and X FAB
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the X FAB. In addition to that, Samsung Electronics is 1.1 times more volatile than X FAB Silicon Foundries. It trades about -0.06 of its total potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.04 per unit of volatility. If you would invest 441.00 in X FAB Silicon Foundries on August 30, 2024 and sell it today you would lose (14.00) from holding X FAB Silicon Foundries or give up 3.17% 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. X FAB Silicon Foundries
Performance |
| Timeline |
| Samsung Electronics |
| X FAB Silicon |
Samsung Electronics and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and X FAB
The main advantage of trading using opposite Samsung Electronics and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| Samsung Electronics vs. Ondine Biomedical | Samsung Electronics vs. Europa Metals | Samsung Electronics vs. Lendinvest PLC | Samsung Electronics vs. Neometals |
| X FAB vs. Lendinvest PLC | X FAB vs. Neometals | X FAB vs. Albion Technology General | X FAB vs. Jupiter Fund Management |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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