Correlation Between Samsung Electronics and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining, you can compare the effects of market volatilities on Samsung Electronics and Caledonia Mining 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 Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Caledonia Mining.
Diversification Opportunities for Samsung Electronics and Caledonia Mining
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and Caledonia is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining 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 Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Caledonia Mining go up and down completely randomly.
Pair Corralation between Samsung Electronics and Caledonia Mining
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 1.87 times less return on investment than Caledonia Mining. In addition to that, Samsung Electronics is 1.53 times more volatile than Caledonia Mining. It trades about 0.02 of its total potential returns per unit of risk. Caledonia Mining is currently generating about 0.06 per unit of volatility. If you would invest 77,500 in Caledonia Mining on October 22, 2024 and sell it today you would earn a total of 1,000.00 from holding Caledonia Mining or generate 1.29% 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. Caledonia Mining
Performance |
| Timeline |
| Samsung Electronics |
| Caledonia Mining |
Samsung Electronics and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Caledonia Mining
The main advantage of trading using opposite Samsung Electronics and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Samsung Electronics vs. FC Investment Trust | Samsung Electronics vs. iShares Physical Silver | Samsung Electronics vs. Capital Drilling | Samsung Electronics vs. Pan American Silver |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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