Correlation Between Samsung Electronics and Young Cos
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Young Cos 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 Young Cos 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 Young Cos Brewery, you can compare the effects of market volatilities on Samsung Electronics and Young Cos 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 Young Cos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Young Cos.
Diversification Opportunities for Samsung Electronics and Young Cos
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samsung and Young is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Young Cos Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Young Cos Brewery 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 Young Cos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Young Cos Brewery has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Young Cos go up and down completely randomly.
Pair Corralation between Samsung Electronics and Young Cos
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Young Cos. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.02 times less risky than Young Cos. The stock trades about -0.02 of its potential returns per unit of risk. The Young Cos Brewery is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 70,427 in Young Cos Brewery on August 25, 2024 and sell it today you would lose (8,227) from holding Young Cos Brewery or give up 11.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Young Cos Brewery
Performance |
| Timeline |
| Samsung Electronics |
| Young Cos Brewery |
Samsung Electronics and Young Cos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Young Cos
The main advantage of trading using opposite Samsung Electronics and Young Cos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Young Cos 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 Young Cos will offset losses from the drop in Young Cos' long position.| Samsung Electronics vs. Toyota Motor Corp | Samsung Electronics vs. SoftBank Group Corp | Samsung Electronics vs. OTP Bank Nyrt | Samsung Electronics vs. Las Vegas Sands |
| Young Cos vs. Samsung Electronics Co | Young Cos vs. Samsung Electronics Co | Young Cos vs. Toyota Motor Corp | Young Cos vs. Hon Hai Precision |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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