Correlation Between Samsung Electronics and Ambev SA
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Ambev SA 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 Ambev SA 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 Ambev SA, you can compare the effects of market volatilities on Samsung Electronics and Ambev SA 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 Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Ambev SA.
Diversification Opportunities for Samsung Electronics and Ambev SA
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samsung and Ambev is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Ambev SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA 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 Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Ambev SA go up and down completely randomly.
Pair Corralation between Samsung Electronics and Ambev SA
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Ambev SA. In addition to that, Samsung Electronics is 1.07 times more volatile than Ambev SA. It trades about -0.09 of its total potential returns per unit of risk. Ambev SA is currently generating about 0.06 per unit of volatility. If you would invest 3,950 in Ambev SA on September 12, 2024 and sell it today you would earn a total of 540.00 from holding Ambev SA or generate 13.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Samsung Electronics Co vs. Ambev SA
Performance |
| Timeline |
| Samsung Electronics |
| Ambev SA |
Samsung Electronics and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Ambev SA
The main advantage of trading using opposite Samsung Electronics and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Ambev SA 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 Ambev SA will offset losses from the drop in Ambev SA's long position.| Samsung Electronics vs. Hoteles City Express | Samsung Electronics vs. United States Steel | Samsung Electronics vs. Grupo Sports World | Samsung Electronics vs. Monster Beverage Corp |
| Ambev SA vs. GMxico Transportes SAB | Ambev SA vs. Samsung Electronics Co | Ambev SA vs. Grupo Sports World | Ambev SA vs. KB Home |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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