Correlation Between Samsung Electronics and Associated British
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Associated British 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 Associated British 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 Associated British Foods, you can compare the effects of market volatilities on Samsung Electronics and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Associated British.
Diversification Opportunities for Samsung Electronics and Associated British
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samsung and Associated is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Associated British go up and down completely randomly.
Pair Corralation between Samsung Electronics and Associated British
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Associated British. In addition to that, Samsung Electronics is 1.57 times more volatile than Associated British Foods. It trades about -0.1 of its total potential returns per unit of risk. Associated British Foods is currently generating about -0.08 per unit of volatility. If you would invest 256,100 in Associated British Foods on September 1, 2024 and sell it today you would lose (36,300) from holding Associated British Foods or give up 14.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Associated British Foods
Performance |
| Timeline |
| Samsung Electronics |
| Associated British Foods |
Samsung Electronics and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Associated British
The main advantage of trading using opposite Samsung Electronics and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Samsung Electronics vs. Roebuck Food Group | Samsung Electronics vs. Molson Coors Beverage | Samsung Electronics vs. United Utilities Group | Samsung Electronics vs. Premier Foods PLC |
| Associated British vs. Samsung Electronics Co | Associated British vs. Samsung Electronics Co | Associated British vs. Hyundai Motor | Associated British 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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