Correlation Between Samsung Electronics and Omega Healthcare
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Omega Healthcare 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 Omega Healthcare 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 Omega Healthcare Investors, you can compare the effects of market volatilities on Samsung Electronics and Omega Healthcare 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 Omega Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Omega Healthcare.
Diversification Opportunities for Samsung Electronics and Omega Healthcare
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and Omega is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Omega Healthcare Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Healthcare Inv 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 Omega Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Healthcare Inv has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Omega Healthcare go up and down completely randomly.
Pair Corralation between Samsung Electronics and Omega Healthcare
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Omega Healthcare. In addition to that, Samsung Electronics is 1.91 times more volatile than Omega Healthcare Investors. It trades about -0.15 of its total potential returns per unit of risk. Omega Healthcare Investors is currently generating about 0.04 per unit of volatility. If you would invest 3,889 in Omega Healthcare Investors on September 5, 2024 and sell it today you would earn a total of 72.00 from holding Omega Healthcare Investors or generate 1.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Samsung Electronics Co vs. Omega Healthcare Investors
Performance |
Timeline |
Samsung Electronics |
Omega Healthcare Inv |
Samsung Electronics and Omega Healthcare Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Samsung Electronics and Omega Healthcare
The main advantage of trading using opposite Samsung Electronics and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Omega Healthcare 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 Omega Healthcare will offset losses from the drop in Omega Healthcare's long position.Samsung Electronics vs. Ashtead Technology Holdings | Samsung Electronics vs. Invesco Physical Silver | Samsung Electronics vs. Pfeiffer Vacuum Technology | Samsung Electronics vs. Caledonia Mining |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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