Correlation Between Samsung Electronics and Macfarlane Group
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Macfarlane Group 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 Macfarlane Group 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 Macfarlane Group PLC, you can compare the effects of market volatilities on Samsung Electronics and Macfarlane Group 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 Macfarlane Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Macfarlane Group.
Diversification Opportunities for Samsung Electronics and Macfarlane Group
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samsung and Macfarlane is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Macfarlane Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macfarlane Group 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 Macfarlane Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macfarlane Group PLC has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Macfarlane Group go up and down completely randomly.
Pair Corralation between Samsung Electronics and Macfarlane Group
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 3.61 times less return on investment than Macfarlane Group. In addition to that, Samsung Electronics is 2.14 times more volatile than Macfarlane Group PLC. It trades about 0.01 of its total potential returns per unit of risk. Macfarlane Group PLC is currently generating about 0.06 per unit of volatility. If you would invest 11,050 in Macfarlane Group PLC on September 12, 2024 and sell it today you would earn a total of 200.00 from holding Macfarlane Group PLC or generate 1.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Macfarlane Group PLC
Performance |
| Timeline |
| Samsung Electronics |
| Macfarlane Group PLC |
Samsung Electronics and Macfarlane Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Macfarlane Group
The main advantage of trading using opposite Samsung Electronics and Macfarlane Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Macfarlane Group 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 Macfarlane Group will offset losses from the drop in Macfarlane Group's long position.| Samsung Electronics vs. Norwegian Air Shuttle | Samsung Electronics vs. GreenX Metals | Samsung Electronics vs. AMG Advanced Metallurgical | Samsung Electronics vs. Gaztransport et Technigaz |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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