Correlation Between Samsung Electronics and Extra Space
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Extra Space 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 Extra Space 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 Extra Space Storage, you can compare the effects of market volatilities on Samsung Electronics and Extra Space 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 Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Extra Space.
Diversification Opportunities for Samsung Electronics and Extra Space
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Extra is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Extra Space Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extra Space Storage 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 Extra Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extra Space Storage has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Extra Space go up and down completely randomly.
Pair Corralation between Samsung Electronics and Extra Space
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Extra Space. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.28 times less risky than Extra Space. The stock trades about 0.0 of its potential returns per unit of risk. The Extra Space Storage is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 14,442 in Extra Space Storage on August 30, 2024 and sell it today you would earn a total of 2,923 from holding Extra Space Storage or generate 20.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.99% |
| Values | Daily Returns |
Samsung Electronics Co vs. Extra Space Storage
Performance |
| Timeline |
| Samsung Electronics |
| Extra Space Storage |
Samsung Electronics and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Extra Space
The main advantage of trading using opposite Samsung Electronics and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Extra Space 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 Extra Space will offset losses from the drop in Extra Space's 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 |
| Extra Space vs. Lendinvest PLC | Extra Space vs. Neometals | Extra Space vs. Albion Technology General | Extra Space 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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