Correlation Between Samsung Electronics and Worldwide Healthcare
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Worldwide Healthcare 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 Worldwide Healthcare 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 Worldwide Healthcare Trust, you can compare the effects of market volatilities on Samsung Electronics and Worldwide Healthcare 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 Worldwide Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Worldwide Healthcare.
Diversification Opportunities for Samsung Electronics and Worldwide Healthcare
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and Worldwide is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Worldwide Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldwide Healthcare 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 Worldwide Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldwide Healthcare has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Worldwide Healthcare go up and down completely randomly.
Pair Corralation between Samsung Electronics and Worldwide Healthcare
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Worldwide Healthcare. In addition to that, Samsung Electronics is 2.19 times more volatile than Worldwide Healthcare Trust. It trades about -0.04 of its total potential returns per unit of risk. Worldwide Healthcare Trust is currently generating about 0.02 per unit of volatility. If you would invest 32,064 in Worldwide Healthcare Trust on September 2, 2024 and sell it today you would earn a total of 1,186 from holding Worldwide Healthcare Trust or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Worldwide Healthcare Trust
Performance |
| Timeline |
| Samsung Electronics |
| Worldwide Healthcare |
Samsung Electronics and Worldwide Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Worldwide Healthcare
The main advantage of trading using opposite Samsung Electronics and Worldwide Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Worldwide Healthcare 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 Worldwide Healthcare will offset losses from the drop in Worldwide Healthcare's long position.| Samsung Electronics vs. Cizzle Biotechnology Holdings | Samsung Electronics vs. International Biotechnology Trust | Samsung Electronics vs. TechnipFMC PLC | Samsung Electronics vs. Intuitive Investments Group |
| Worldwide Healthcare vs. EVS Broadcast Equipment | Worldwide Healthcare vs. Central Asia Metals | Worldwide Healthcare vs. Trainline Plc | Worldwide Healthcare vs. Adriatic Metals |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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