Correlation Between Samsung Electronics and Hyundai
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Hyundai 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 Hyundai 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 Hyundai Motor, you can compare the effects of market volatilities on Samsung Electronics and Hyundai 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 Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Hyundai.
Diversification Opportunities for Samsung Electronics and Hyundai
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Hyundai is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor 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 Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Hyundai go up and down completely randomly.
Pair Corralation between Samsung Electronics and Hyundai
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.96 times more return on investment than Hyundai. However, Samsung Electronics Co is 1.04 times less risky than Hyundai. It trades about -0.13 of its potential returns per unit of risk. Hyundai Motor is currently generating about -0.16 per unit of risk. If you would invest 102,200 in Samsung Electronics Co on August 28, 2024 and sell it today you would lose (14,200) from holding Samsung Electronics Co or give up 13.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Hyundai Motor
Performance |
| Timeline |
| Samsung Electronics |
| Hyundai Motor |
Samsung Electronics and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Hyundai
The main advantage of trading using opposite Samsung Electronics and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Hyundai 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 Hyundai will offset losses from the drop in Hyundai'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 |
| Hyundai vs. MG Plc | Hyundai vs. Admiral Group PLC | Hyundai vs. Anglo American PLC | Hyundai vs. Vodafone Group 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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