Correlation Between Samsung Electronics and Pets At
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Pets At 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 Pets At 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 Pets at Home, you can compare the effects of market volatilities on Samsung Electronics and Pets At 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 Pets At. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Pets At.
Diversification Opportunities for Samsung Electronics and Pets At
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Pets is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Pets at Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pets at Home 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 Pets At. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pets at Home has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Pets At go up and down completely randomly.
Pair Corralation between Samsung Electronics and Pets At
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.82 times more return on investment than Pets At. However, Samsung Electronics Co is 1.22 times less risky than Pets At. It trades about -0.05 of its potential returns per unit of risk. Pets at Home is currently generating about -0.05 per unit of risk. If you would invest 112,935 in Samsung Electronics Co on September 12, 2024 and sell it today you would lose (34,535) from holding Samsung Electronics Co or give up 30.58% 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. Pets at Home
Performance |
| Timeline |
| Samsung Electronics |
| Pets at Home |
Samsung Electronics and Pets At Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Pets At
The main advantage of trading using opposite Samsung Electronics and Pets At positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Pets At 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 Pets At will offset losses from the drop in Pets At'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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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