Correlation Between Samsung Electronics and Johnson Matthey
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Johnson Matthey 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 Johnson Matthey 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 Johnson Matthey PLC, you can compare the effects of market volatilities on Samsung Electronics and Johnson Matthey 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 Johnson Matthey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Johnson Matthey.
Diversification Opportunities for Samsung Electronics and Johnson Matthey
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Johnson is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Johnson Matthey PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Matthey 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 Johnson Matthey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Matthey PLC has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Johnson Matthey go up and down completely randomly.
Pair Corralation between Samsung Electronics and Johnson Matthey
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Johnson Matthey. In addition to that, Samsung Electronics is 1.12 times more volatile than Johnson Matthey PLC. It trades about -0.07 of its total potential returns per unit of risk. Johnson Matthey PLC is currently generating about -0.02 per unit of volatility. If you would invest 151,303 in Johnson Matthey PLC on October 29, 2024 and sell it today you would lose (13,703) from holding Johnson Matthey PLC or give up 9.06% 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. Johnson Matthey PLC
Performance |
| Timeline |
| Samsung Electronics |
| Johnson Matthey PLC |
Samsung Electronics and Johnson Matthey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Johnson Matthey
The main advantage of trading using opposite Samsung Electronics and Johnson Matthey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Johnson Matthey 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 Johnson Matthey will offset losses from the drop in Johnson Matthey's long position.| Samsung Electronics vs. Monster Beverage Corp | Samsung Electronics vs. Young Cos Brewery | Samsung Electronics vs. Flow Traders NV | Samsung Electronics vs. LBG Media PLC |
| Johnson Matthey vs. Fevertree Drinks Plc | Johnson Matthey vs. Ameriprise Financial | Johnson Matthey vs. Taiwan Semiconductor Manufacturing | Johnson Matthey vs. Synchrony Financial |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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