Correlation Between Samsung Electronics and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on Samsung Electronics and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and SMA Solar.
Diversification Opportunities for Samsung Electronics and SMA Solar
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Samsung and SMA is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and SMA Solar go up and down completely randomly.
Pair Corralation between Samsung Electronics and SMA Solar
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.51 times more return on investment than SMA Solar. However, Samsung Electronics Co is 1.96 times less risky than SMA Solar. It trades about 0.0 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.07 per unit of risk. If you would invest 109,776 in Samsung Electronics Co on September 1, 2024 and sell it today you would lose (11,676) from holding Samsung Electronics Co or give up 10.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. SMA Solar Technology
Performance |
| Timeline |
| Samsung Electronics |
| SMA Solar Technology |
Samsung Electronics and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and SMA Solar
The main advantage of trading using opposite Samsung Electronics and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Samsung Electronics vs. Ecclesiastical Insurance Office | Samsung Electronics vs. FC Investment Trust | Samsung Electronics vs. New Residential Investment | Samsung Electronics vs. DFS Furniture PLC |
| SMA Solar vs. Uniper SE | SMA Solar vs. Mulberry Group PLC | SMA Solar vs. London Security Plc | SMA Solar vs. Triad Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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