Correlation Between Samsung Electronics and ITV PLC
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and ITV 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 ITV 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 ITV PLC, you can compare the effects of market volatilities on Samsung Electronics and ITV 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 ITV PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and ITV PLC.
Diversification Opportunities for Samsung Electronics and ITV PLC
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and ITV is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and ITV PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV 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 ITV PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITV PLC has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and ITV PLC go up and down completely randomly.
Pair Corralation between Samsung Electronics and ITV PLC
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.75 times more return on investment than ITV PLC. However, Samsung Electronics Co is 1.34 times less risky than ITV PLC. It trades about -0.04 of its potential returns per unit of risk. ITV PLC is currently generating about -0.04 per unit of risk. If you would invest 88,300 in Samsung Electronics Co on August 29, 2024 and sell it today you would lose (3,200) from holding Samsung Electronics Co or give up 3.62% 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. ITV PLC
Performance |
| Timeline |
| Samsung Electronics |
| ITV PLC |
Samsung Electronics and ITV PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and ITV PLC
The main advantage of trading using opposite Samsung Electronics and ITV PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, ITV 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 ITV PLC will offset losses from the drop in ITV PLC's long position.| Samsung Electronics vs. Ondine Biomedical | Samsung Electronics vs. Europa Metals | Samsung Electronics vs. Lendinvest PLC | Samsung Electronics vs. Neometals |
| ITV PLC vs. Primary Health Properties | ITV PLC vs. Teradata Corp | ITV PLC vs. Charter Communications Cl | ITV PLC vs. Alliance Data Systems |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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