Correlation Between Samsung Electronics and Diversified Energy
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Diversified Energy 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 Diversified Energy 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 Diversified Energy, you can compare the effects of market volatilities on Samsung Electronics and Diversified Energy 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 Diversified Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Diversified Energy.
Diversification Opportunities for Samsung Electronics and Diversified Energy
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and Diversified is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Diversified Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Energy 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 Diversified Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Energy has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Diversified Energy go up and down completely randomly.
Pair Corralation between Samsung Electronics and Diversified Energy
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Diversified Energy. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.05 times less risky than Diversified Energy. The stock trades about -0.04 of its potential returns per unit of risk. The Diversified Energy is currently generating about 0.58 of returns per unit of risk over similar time horizon. If you would invest 89,850 in Diversified Energy on August 27, 2024 and sell it today you would earn a total of 37,250 from holding Diversified Energy or generate 41.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Diversified Energy
Performance |
| Timeline |
| Samsung Electronics |
| Diversified Energy |
Samsung Electronics and Diversified Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Diversified Energy
The main advantage of trading using opposite Samsung Electronics and Diversified Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Diversified Energy 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 Diversified Energy will offset losses from the drop in Diversified Energy's long position.| Samsung Electronics vs. Royal Bank of | Samsung Electronics vs. Cembra Money Bank | Samsung Electronics vs. MT Bank Corp | Samsung Electronics vs. St Galler Kantonalbank |
| Diversified Energy vs. Gaztransport et Technigaz | Diversified Energy vs. Broadridge Financial Solutions | Diversified Energy vs. Schroders Investment Trusts | Diversified Energy vs. Trainline Plc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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