Correlation Between Samsung Electronics and BYD Co
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and BYD Co 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 BYD Co 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 BYD Co, you can compare the effects of market volatilities on Samsung Electronics and BYD Co 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 BYD Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and BYD Co.
Diversification Opportunities for Samsung Electronics and BYD Co
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and BYD is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and BYD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co 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 BYD Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD Co has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and BYD Co go up and down completely randomly.
Pair Corralation between Samsung Electronics and BYD Co
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the BYD Co. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.35 times less risky than BYD Co. The stock trades about -0.04 of its potential returns per unit of risk. The BYD Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,558 in BYD Co on August 29, 2024 and sell it today you would earn a total of 2.00 from holding BYD Co or generate 0.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. BYD Co
Performance |
| Timeline |
| Samsung Electronics |
| BYD Co |
Samsung Electronics and BYD Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and BYD Co
The main advantage of trading using opposite Samsung Electronics and BYD Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, BYD Co 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 BYD Co will offset losses from the drop in BYD Co's long position.| Samsung Electronics vs. Ondine Biomedical | Samsung Electronics vs. Europa Metals | Samsung Electronics vs. Lendinvest PLC | Samsung Electronics vs. Neometals |
| BYD Co vs. Lendinvest PLC | BYD Co vs. Neometals | BYD Co vs. Albion Technology General | BYD Co 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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