Correlation Between Samsung Electronics and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Arrow Electronics 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 Arrow Electronics 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 Arrow Electronics, you can compare the effects of market volatilities on Samsung Electronics and Arrow Electronics 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 Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Arrow Electronics.
Diversification Opportunities for Samsung Electronics and Arrow Electronics
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samsung and Arrow is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics 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 Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Arrow Electronics go up and down completely randomly.
Pair Corralation between Samsung Electronics and Arrow Electronics
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Arrow Electronics. In addition to that, Samsung Electronics is 1.12 times more volatile than Arrow Electronics. It trades about 0.0 of its total potential returns per unit of risk. Arrow Electronics is currently generating about 0.03 per unit of volatility. If you would invest 10,435 in Arrow Electronics on August 30, 2024 and sell it today you would earn a total of 1,582 from holding Arrow Electronics or generate 15.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.35% |
| Values | Daily Returns |
Samsung Electronics Co vs. Arrow Electronics
Performance |
| Timeline |
| Samsung Electronics |
| Arrow Electronics |
Samsung Electronics and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Arrow Electronics
The main advantage of trading using opposite Samsung Electronics and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| Samsung Electronics vs. Lundin Mining Corp | Samsung Electronics vs. Metals Exploration Plc | Samsung Electronics vs. Check Point Software | Samsung Electronics vs. GreenX Metals |
| Arrow Electronics vs. Lendinvest PLC | Arrow Electronics vs. Neometals | Arrow Electronics vs. Albion Technology General | Arrow Electronics vs. Jupiter Fund Management |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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