Correlation Between Samsung Electronics and Smithson Investment
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Smithson 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 Smithson 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 Smithson Investment Trust, you can compare the effects of market volatilities on Samsung Electronics and Smithson 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 Smithson Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Smithson Investment.
Diversification Opportunities for Samsung Electronics and Smithson Investment
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Samsung and Smithson is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Smithson Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smithson Investment Trust 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 Smithson Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smithson Investment Trust has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Smithson Investment go up and down completely randomly.
Pair Corralation between Samsung Electronics and Smithson Investment
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Smithson Investment. In addition to that, Samsung Electronics is 1.3 times more volatile than Smithson Investment Trust. It trades about -0.01 of its total potential returns per unit of risk. Smithson Investment Trust is currently generating about 0.03 per unit of volatility. If you would invest 131,400 in Smithson Investment Trust on August 30, 2024 and sell it today you would earn a total of 17,800 from holding Smithson Investment Trust or generate 13.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Samsung Electronics Co vs. Smithson Investment Trust
Performance |
| Timeline |
| Samsung Electronics |
| Smithson Investment Trust |
Samsung Electronics and Smithson Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Smithson Investment
The main advantage of trading using opposite Samsung Electronics and Smithson Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Smithson 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 Smithson Investment will offset losses from the drop in Smithson Investment's long position.| Samsung Electronics vs. Litigation Capital Management | Samsung Electronics vs. Liontrust Asset Management | Samsung Electronics vs. Invesco Physical Silver | Samsung Electronics vs. Westlake Chemical Corp |
| Smithson Investment vs. Samsung Electronics Co | Smithson Investment vs. Samsung Electronics Co | Smithson Investment vs. Hyundai Motor | Smithson Investment vs. Toyota Motor Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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