Correlation Between Samsung Electronics and Abbott Laboratories
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Abbott Laboratories 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 Abbott Laboratories 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 Abbott Laboratories, you can compare the effects of market volatilities on Samsung Electronics and Abbott Laboratories 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 Abbott Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Abbott Laboratories.
Diversification Opportunities for Samsung Electronics and Abbott Laboratories
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Abbott is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Abbott Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbott Laboratories 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 Abbott Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbott Laboratories has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Abbott Laboratories go up and down completely randomly.
Pair Corralation between Samsung Electronics and Abbott Laboratories
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 1.45 times more return on investment than Abbott Laboratories. However, Samsung Electronics is 1.45 times more volatile than Abbott Laboratories. It trades about 0.1 of its potential returns per unit of risk. Abbott Laboratories is currently generating about -0.19 per unit of risk. If you would invest 1,876,072 in Samsung Electronics Co on September 15, 2024 and sell it today you would earn a total of 69,678 from holding Samsung Electronics Co or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Abbott Laboratories
Performance |
| Timeline |
| Samsung Electronics |
| Abbott Laboratories |
Samsung Electronics and Abbott Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Abbott Laboratories
The main advantage of trading using opposite Samsung Electronics and Abbott Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Abbott Laboratories 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 Abbott Laboratories will offset losses from the drop in Abbott Laboratories' long position.| Samsung Electronics vs. Cognizant Technology Solutions | Samsung Electronics vs. Grupo Carso SAB | Samsung Electronics vs. Verizon Communications | Samsung Electronics vs. Costco Wholesale |
| Abbott Laboratories vs. GMxico Transportes SAB | Abbott Laboratories vs. Monster Beverage Corp | Abbott Laboratories vs. Grupo Carso SAB | Abbott Laboratories vs. Samsung Electronics Co |
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 CEOs Directory module to screen CEOs from public companies around the world.
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