Correlation Between Samsung Electronics and Cars
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Cars 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 Cars 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 Cars Inc, you can compare the effects of market volatilities on Samsung Electronics and Cars 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 Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Cars.
Diversification Opportunities for Samsung Electronics and Cars
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samsung and Cars is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc 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 Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Cars go up and down completely randomly.
Pair Corralation between Samsung Electronics and Cars
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Cars. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.03 times less risky than Cars. The stock trades about -0.02 of its potential returns per unit of risk. The Cars Inc is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,596 in Cars Inc on August 26, 2024 and sell it today you would earn a total of 307.00 from holding Cars Inc or generate 19.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.27% |
| Values | Daily Returns |
Samsung Electronics Co vs. Cars Inc
Performance |
| Timeline |
| Samsung Electronics |
| Cars Inc |
Samsung Electronics and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Cars
The main advantage of trading using opposite Samsung Electronics and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| Samsung Electronics vs. Taylor Maritime Investments | Samsung Electronics vs. Monks Investment Trust | Samsung Electronics vs. Schroders Investment Trusts | Samsung Electronics vs. Aurora Investment Trust |
| Cars vs. Samsung Electronics Co | Cars vs. Samsung Electronics Co | Cars vs. Hyundai Motor | Cars 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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