Correlation Between Samsung Electronics and Ryanair Holdings
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Ryanair Holdings 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 Ryanair Holdings 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 Ryanair Holdings plc, you can compare the effects of market volatilities on Samsung Electronics and Ryanair Holdings 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 Ryanair Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Ryanair Holdings.
Diversification Opportunities for Samsung Electronics and Ryanair Holdings
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Ryanair is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Ryanair Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryanair Holdings plc 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 Ryanair Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryanair Holdings plc has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Ryanair Holdings go up and down completely randomly.
Pair Corralation between Samsung Electronics and Ryanair Holdings
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Ryanair Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.49 times less risky than Ryanair Holdings. The stock trades about -0.29 of its potential returns per unit of risk. The Ryanair Holdings plc is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 156,000 in Ryanair Holdings plc on November 7, 2024 and sell it today you would earn a total of 17,000 from holding Ryanair Holdings plc or generate 10.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Ryanair Holdings plc
Performance |
| Timeline |
| Samsung Electronics |
| Ryanair Holdings plc |
Samsung Electronics and Ryanair Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Ryanair Holdings
The main advantage of trading using opposite Samsung Electronics and Ryanair Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Ryanair Holdings 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 Ryanair Holdings will offset losses from the drop in Ryanair Holdings' long position.| Samsung Electronics vs. Auto Trader Group | Samsung Electronics vs. Aptitude Software Group | Samsung Electronics vs. Universal Music Group | Samsung Electronics vs. Travel Leisure Co |
| Ryanair Holdings vs. Adriatic Metals | Ryanair Holdings vs. CNH Industrial NV | Ryanair Holdings vs. Fair Oaks Income | Ryanair Holdings vs. First Class Metals |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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