Correlation Between Samsung Electronics and Quilter PLC
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Quilter PLC 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 Quilter PLC 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 Quilter PLC, you can compare the effects of market volatilities on Samsung Electronics and Quilter PLC 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 Quilter PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Quilter PLC.
Diversification Opportunities for Samsung Electronics and Quilter PLC
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Quilter is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Quilter PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quilter 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 Quilter PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quilter PLC has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Quilter PLC go up and down completely randomly.
Pair Corralation between Samsung Electronics and Quilter PLC
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 9.0 times less return on investment than Quilter PLC. But when comparing it to its historical volatility, Samsung Electronics Co is 1.14 times less risky than Quilter PLC. It trades about 0.01 of its potential returns per unit of risk. Quilter PLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 15,310 in Quilter PLC on November 2, 2024 and sell it today you would earn a total of 840.00 from holding Quilter PLC or generate 5.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Samsung Electronics Co vs. Quilter PLC
Performance |
| Timeline |
| Samsung Electronics |
| Quilter PLC |
Samsung Electronics and Quilter PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Quilter PLC
The main advantage of trading using opposite Samsung Electronics and Quilter PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Quilter PLC 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 Quilter PLC will offset losses from the drop in Quilter PLC's long position.The idea behind Samsung Electronics Co and Quilter PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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