Correlation Between Samsung Electronics and Aeorema Communications
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Aeorema Communications 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 Aeorema Communications 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 Aeorema Communications Plc, you can compare the effects of market volatilities on Samsung Electronics and Aeorema Communications 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 Aeorema Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Aeorema Communications.
Diversification Opportunities for Samsung Electronics and Aeorema Communications
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and Aeorema is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Aeorema Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeorema Communications 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 Aeorema Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeorema Communications has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Aeorema Communications go up and down completely randomly.
Pair Corralation between Samsung Electronics and Aeorema Communications
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Aeorema Communications. In addition to that, Samsung Electronics is 1.72 times more volatile than Aeorema Communications Plc. It trades about -0.02 of its total potential returns per unit of risk. Aeorema Communications Plc is currently generating about 0.1 per unit of volatility. If you would invest 5,250 in Aeorema Communications Plc on August 28, 2024 and sell it today you would earn a total of 200.00 from holding Aeorema Communications Plc or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Aeorema Communications Plc
Performance |
| Timeline |
| Samsung Electronics |
| Aeorema Communications |
Samsung Electronics and Aeorema Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Aeorema Communications
The main advantage of trading using opposite Samsung Electronics and Aeorema Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Aeorema Communications 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 Aeorema Communications will offset losses from the drop in Aeorema Communications' long position.| Samsung Electronics vs. Futura Medical | Samsung Electronics vs. Evolution Gaming Group | Samsung Electronics vs. Games Workshop Group | Samsung Electronics vs. AMG Advanced Metallurgical |
| Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Hyundai Motor | Aeorema Communications 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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