Correlation Between Samsung Electronics and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Spirent 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 Spirent 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 Spirent Communications plc, you can compare the effects of market volatilities on Samsung Electronics and Spirent 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Spirent Communications.
Diversification Opportunities for Samsung Electronics and Spirent Communications
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Spirent is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Spirent Communications go up and down completely randomly.
Pair Corralation between Samsung Electronics and Spirent Communications
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 2.21 times less return on investment than Spirent Communications. In addition to that, Samsung Electronics is 2.21 times more volatile than Spirent Communications plc. It trades about 0.01 of its total potential returns per unit of risk. Spirent Communications plc is currently generating about 0.06 per unit of volatility. If you would invest 17,670 in Spirent Communications plc on October 23, 2024 and sell it today you would earn a total of 160.00 from holding Spirent Communications plc or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Spirent Communications plc
Performance |
| Timeline |
| Samsung Electronics |
| Spirent Communications |
Samsung Electronics and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Spirent Communications
The main advantage of trading using opposite Samsung Electronics and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Spirent 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| Samsung Electronics vs. Software Circle plc | Samsung Electronics vs. Check Point Software | Samsung Electronics vs. Gaztransport et Technigaz | Samsung Electronics vs. Bloomsbury Publishing Plc |
| Spirent Communications vs. Samsung Electronics Co | Spirent Communications vs. Samsung Electronics Co | Spirent Communications vs. Toyota Motor Corp | Spirent Communications vs. State Bank of |
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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