Correlation Between Samsung Electronics and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Auto Trader 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 Auto Trader 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 Auto Trader Group, you can compare the effects of market volatilities on Samsung Electronics and Auto Trader 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 Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Auto Trader.
Diversification Opportunities for Samsung Electronics and Auto Trader
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samsung and Auto is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group 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 Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Auto Trader go up and down completely randomly.
Pair Corralation between Samsung Electronics and Auto Trader
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Auto Trader. In addition to that, Samsung Electronics is 1.25 times more volatile than Auto Trader Group. It trades about -0.04 of its total potential returns per unit of risk. Auto Trader Group is currently generating about 0.05 per unit of volatility. If you would invest 72,328 in Auto Trader Group on August 28, 2024 and sell it today you would earn a total of 10,952 from holding Auto Trader Group or generate 15.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Auto Trader Group
Performance |
| Timeline |
| Samsung Electronics |
| Auto Trader Group |
Samsung Electronics and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Auto Trader
The main advantage of trading using opposite Samsung Electronics and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's long position.| Samsung Electronics vs. Toyota Motor Corp | Samsung Electronics vs. SoftBank Group Corp | Samsung Electronics vs. OTP Bank Nyrt | Samsung Electronics vs. Las Vegas Sands |
| Auto Trader vs. The Mercantile Investment | Auto Trader vs. Herald Investment Trust | Auto Trader vs. Diversified Energy | Auto Trader vs. Orient Telecoms |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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