Correlation Between Samsung Electronics and Seed Innovations
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Seed Innovations 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 Seed Innovations 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 Seed Innovations, you can compare the effects of market volatilities on Samsung Electronics and Seed Innovations 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 Seed Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Seed Innovations.
Diversification Opportunities for Samsung Electronics and Seed Innovations
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Samsung and Seed is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Seed Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seed Innovations 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 Seed Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seed Innovations has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Seed Innovations go up and down completely randomly.
Pair Corralation between Samsung Electronics and Seed Innovations
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Seed Innovations. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.33 times less risky than Seed Innovations. The stock trades about -0.1 of its potential returns per unit of risk. The Seed Innovations is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 205.00 in Seed Innovations on September 24, 2024 and sell it today you would lose (45.00) from holding Seed Innovations or give up 21.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Seed Innovations
Performance |
| Timeline |
| Samsung Electronics |
| Seed Innovations |
Samsung Electronics and Seed Innovations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Seed Innovations
The main advantage of trading using opposite Samsung Electronics and Seed Innovations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Seed Innovations 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 Seed Innovations will offset losses from the drop in Seed Innovations' long position.| Samsung Electronics vs. Air Products Chemicals | Samsung Electronics vs. Alliance Data Systems | Samsung Electronics vs. Erste Group Bank | Samsung Electronics vs. UNIQA Insurance Group |
| Seed Innovations vs. Samsung Electronics Co | Seed Innovations vs. Samsung Electronics Co | Seed Innovations vs. Hyundai Motor | Seed Innovations 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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