Correlation Between Samsung Electronics and Centrica PLC
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Centrica 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 Centrica 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 Centrica PLC, you can compare the effects of market volatilities on Samsung Electronics and Centrica 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 Centrica PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Centrica PLC.
Diversification Opportunities for Samsung Electronics and Centrica PLC
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Samsung and Centrica is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Centrica PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrica 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 Centrica PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrica PLC has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Centrica PLC go up and down completely randomly.
Pair Corralation between Samsung Electronics and Centrica PLC
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 1.09 times more return on investment than Centrica PLC. However, Samsung Electronics is 1.09 times more volatile than Centrica PLC. It trades about 0.15 of its potential returns per unit of risk. Centrica PLC is currently generating about 0.11 per unit of risk. If you would invest 72,300 in Samsung Electronics Co on December 4, 2024 and sell it today you would earn a total of 4,400 from holding Samsung Electronics Co or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Samsung Electronics Co vs. Centrica PLC
Performance |
| Timeline |
| Samsung Electronics |
| Centrica PLC |
Samsung Electronics and Centrica PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Centrica PLC
The main advantage of trading using opposite Samsung Electronics and Centrica PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Centrica 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 Centrica PLC will offset losses from the drop in Centrica PLC's long position.| Samsung Electronics vs. InterContinental Hotels Group | Samsung Electronics vs. Bloomsbury Publishing Plc | Samsung Electronics vs. Critical Metals Plc | Samsung Electronics vs. Compagnie Plastic Omnium |
| Centrica PLC vs. Atresmedia | Centrica PLC vs. Air Products Chemicals | Centrica PLC vs. Wizz Air Holdings | Centrica PLC vs. G5 Entertainment AB |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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