Correlation Between Samsung Electronics and Eaton Corp
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Eaton Corp 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 Eaton Corp 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 Eaton Corp PLC, you can compare the effects of market volatilities on Samsung Electronics and Eaton Corp 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 Eaton Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Eaton Corp.
Diversification Opportunities for Samsung Electronics and Eaton Corp
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Eaton is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Eaton Corp PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Corp PLC 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 Eaton Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Corp PLC has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Eaton Corp go up and down completely randomly.
Pair Corralation between Samsung Electronics and Eaton Corp
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Eaton Corp. In addition to that, Samsung Electronics is 1.51 times more volatile than Eaton Corp PLC. It trades about -0.17 of its total potential returns per unit of risk. Eaton Corp PLC is currently generating about 0.24 per unit of volatility. If you would invest 33,284 in Eaton Corp PLC on September 5, 2024 and sell it today you would earn a total of 3,961 from holding Eaton Corp PLC or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Eaton Corp PLC
Performance |
| Timeline |
| Samsung Electronics |
| Eaton Corp PLC |
Samsung Electronics and Eaton Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Eaton Corp
The main advantage of trading using opposite Samsung Electronics and Eaton Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Eaton Corp 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 Eaton Corp will offset losses from the drop in Eaton Corp'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 |
| Eaton Corp vs. Samsung Electronics Co | Eaton Corp vs. Samsung Electronics Co | Eaton Corp vs. Hyundai Motor | Eaton Corp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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