Correlation Between Samsung Electronics and CVS Health
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and CVS Health 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 CVS Health 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 CVS Health Corp, you can compare the effects of market volatilities on Samsung Electronics and CVS Health 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 CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and CVS Health.
Diversification Opportunities for Samsung Electronics and CVS Health
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Samsung and CVS is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health Corp 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 CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health Corp has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and CVS Health go up and down completely randomly.
Pair Corralation between Samsung Electronics and CVS Health
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the CVS Health. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.16 times less risky than CVS Health. The stock trades about -0.12 of its potential returns per unit of risk. The CVS Health Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,517 in CVS Health Corp on September 4, 2024 and sell it today you would earn a total of 394.00 from holding CVS Health Corp or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. CVS Health Corp
Performance |
| Timeline |
| Samsung Electronics |
| CVS Health Corp |
Samsung Electronics and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and CVS Health
The main advantage of trading using opposite Samsung Electronics and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.| Samsung Electronics vs. FC Investment Trust | Samsung Electronics vs. Smithson Investment Trust | Samsung Electronics vs. Beeks Trading | Samsung Electronics vs. New Residential Investment |
| CVS Health vs. AMG Advanced Metallurgical | CVS Health vs. Ryanair Holdings plc | CVS Health vs. Universal Music Group | CVS Health vs. Gear4music Plc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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