Correlation Between Samsung Electronics and BlackRock
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and BlackRock 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 BlackRock 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 BlackRock, you can compare the effects of market volatilities on Samsung Electronics and BlackRock 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 BlackRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and BlackRock.
Diversification Opportunities for Samsung Electronics and BlackRock
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and BlackRock is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock 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 BlackRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and BlackRock go up and down completely randomly.
Pair Corralation between Samsung Electronics and BlackRock
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the BlackRock. In addition to that, Samsung Electronics is 1.46 times more volatile than BlackRock. It trades about -0.01 of its total potential returns per unit of risk. BlackRock is currently generating about 0.16 per unit of volatility. If you would invest 1,189,074 in BlackRock on September 14, 2024 and sell it today you would earn a total of 933,126 from holding BlackRock or generate 78.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Samsung Electronics Co vs. BlackRock
Performance |
| Timeline |
| Samsung Electronics |
| BlackRock |
Samsung Electronics and BlackRock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and BlackRock
The main advantage of trading using opposite Samsung Electronics and BlackRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, BlackRock 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 BlackRock will offset losses from the drop in BlackRock's long position.The idea behind Samsung Electronics Co and BlackRock 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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