Correlation Between Samsung Electronics and Wheaton Precious
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Wheaton Precious 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 Wheaton Precious 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 Wheaton Precious Metals, you can compare the effects of market volatilities on Samsung Electronics and Wheaton Precious 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 Wheaton Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Wheaton Precious.
Diversification Opportunities for Samsung Electronics and Wheaton Precious
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Wheaton is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious Metals 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 Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Wheaton Precious go up and down completely randomly.
Pair Corralation between Samsung Electronics and Wheaton Precious
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 11.41 times less return on investment than Wheaton Precious. In addition to that, Samsung Electronics is 1.28 times more volatile than Wheaton Precious Metals. It trades about 0.01 of its total potential returns per unit of risk. Wheaton Precious Metals is currently generating about 0.22 per unit of volatility. If you would invest 470,000 in Wheaton Precious Metals on November 2, 2024 and sell it today you would earn a total of 33,500 from holding Wheaton Precious Metals or generate 7.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Wheaton Precious Metals
Performance |
| Timeline |
| Samsung Electronics |
| Wheaton Precious Metals |
Samsung Electronics and Wheaton Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Wheaton Precious
The main advantage of trading using opposite Samsung Electronics and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Wheaton Precious 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 Wheaton Precious will offset losses from the drop in Wheaton Precious' long position.The idea behind Samsung Electronics Co and Wheaton Precious Metals 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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