Correlation Between Samsung Electronics and Airea Plc
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Airea Plc 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 Airea Plc 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 Airea Plc, you can compare the effects of market volatilities on Samsung Electronics and Airea Plc 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 Airea Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Airea Plc.
Diversification Opportunities for Samsung Electronics and Airea Plc
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Samsung and Airea is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Airea Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airea 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 Airea Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airea Plc has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Airea Plc go up and down completely randomly.
Pair Corralation between Samsung Electronics and Airea Plc
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.66 times more return on investment than Airea Plc. However, Samsung Electronics Co is 1.52 times less risky than Airea Plc. It trades about -0.02 of its potential returns per unit of risk. Airea Plc is currently generating about -0.02 per unit of risk. If you would invest 100,924 in Samsung Electronics Co on November 28, 2024 and sell it today you would lose (19,324) from holding Samsung Electronics Co or give up 19.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Airea Plc
Performance |
| Timeline |
| Samsung Electronics |
| Airea Plc |
Samsung Electronics and Airea Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Airea Plc
The main advantage of trading using opposite Samsung Electronics and Airea Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Airea Plc 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 Airea Plc will offset losses from the drop in Airea Plc's long position.| Samsung Electronics vs. Impax Environmental Markets | Samsung Electronics vs. Bell Food Group | Samsung Electronics vs. Austevoll Seafood ASA | Samsung Electronics vs. Westlake Chemical Corp |
| Airea Plc vs. Fevertree Drinks Plc | Airea Plc vs. Nordic Semiconductor ASA | Airea Plc vs. Universal Display Corp | Airea Plc vs. JD Sports Fashion |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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