Correlation Between Samsung Electronics and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Finnair Oyj 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 Finnair Oyj 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 Finnair Oyj, you can compare the effects of market volatilities on Samsung Electronics and Finnair Oyj 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 Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Finnair Oyj.
Diversification Opportunities for Samsung Electronics and Finnair Oyj
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samsung and Finnair is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj 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 Finnair Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finnair Oyj has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Finnair Oyj go up and down completely randomly.
Pair Corralation between Samsung Electronics and Finnair Oyj
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 2.29 times more return on investment than Finnair Oyj. However, Samsung Electronics is 2.29 times more volatile than Finnair Oyj. It trades about -0.08 of its potential returns per unit of risk. Finnair Oyj is currently generating about -0.26 per unit of risk. If you would invest 106,000 in Samsung Electronics Co on August 31, 2024 and sell it today you would lose (6,800) from holding Samsung Electronics Co or give up 6.42% 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. Finnair Oyj
Performance |
| Timeline |
| Samsung Electronics |
| Finnair Oyj |
Samsung Electronics and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Finnair Oyj
The main advantage of trading using opposite Samsung Electronics and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Finnair Oyj 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 Finnair Oyj will offset losses from the drop in Finnair Oyj's long position.| Samsung Electronics vs. The Investment | Samsung Electronics vs. Kinnevik Investment AB | Samsung Electronics vs. The Mercantile Investment | Samsung Electronics vs. Smithson Investment Trust |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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