Correlation Between Samsung Electronics and Investment
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Investment 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 Investment 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 The Investment, you can compare the effects of market volatilities on Samsung Electronics and Investment 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Investment.
Diversification Opportunities for Samsung Electronics and Investment
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Investment is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and The Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Investment go up and down completely randomly.
Pair Corralation between Samsung Electronics and Investment
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Investment. In addition to that, Samsung Electronics is 3.39 times more volatile than The Investment. It trades about -0.1 of its total potential returns per unit of risk. The Investment is currently generating about 0.08 per unit of volatility. If you would invest 35,500 in The Investment on September 1, 2024 and sell it today you would earn a total of 2,100 from holding The Investment or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. The Investment
Performance |
| Timeline |
| Samsung Electronics |
| Investment |
Samsung Electronics and Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Investment
The main advantage of trading using opposite Samsung Electronics and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Investment 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 Investment will offset losses from the drop in Investment's long position.| Samsung Electronics vs. Roebuck Food Group | Samsung Electronics vs. Molson Coors Beverage | Samsung Electronics vs. United Utilities Group | Samsung Electronics vs. Premier Foods PLC |
| Investment vs. Automatic Data Processing | Investment vs. Pentair PLC | Investment vs. Cairn Homes PLC | Investment vs. Ryanair Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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