Correlation Between Samsung Electronics and JD Sports
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and JD Sports 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 JD Sports 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 JD Sports Fashion, you can compare the effects of market volatilities on Samsung Electronics and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and JD Sports.
Diversification Opportunities for Samsung Electronics and JD Sports
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and JD Sports is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and JD Sports go up and down completely randomly.
Pair Corralation between Samsung Electronics and JD Sports
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.78 times more return on investment than JD Sports. However, Samsung Electronics Co is 1.28 times less risky than JD Sports. It trades about -0.08 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.23 per unit of risk. If you would invest 106,900 in Samsung Electronics Co on August 30, 2024 and sell it today you would lose (7,300) from holding Samsung Electronics Co or give up 6.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. JD Sports Fashion
Performance |
| Timeline |
| Samsung Electronics |
| JD Sports Fashion |
Samsung Electronics and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and JD Sports
The main advantage of trading using opposite Samsung Electronics and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| Samsung Electronics vs. Lundin Mining Corp | Samsung Electronics vs. Metals Exploration Plc | Samsung Electronics vs. Check Point Software | Samsung Electronics vs. GreenX Metals |
| JD Sports vs. Ondine Biomedical | JD Sports vs. Europa Metals | JD Sports vs. Lendinvest PLC | JD Sports vs. Neometals |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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