Correlation Between Samsung Electronics and CVS Health
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and CVS Health 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 CVS Health 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 CVS Health, you can compare the effects of market volatilities on Samsung Electronics and CVS Health 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 CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and CVS Health.
Diversification Opportunities for Samsung Electronics and CVS Health
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and CVS is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health 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 CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and CVS Health go up and down completely randomly.
Pair Corralation between Samsung Electronics and CVS Health
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the CVS Health. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.42 times less risky than CVS Health. The stock trades about -0.15 of its potential returns per unit of risk. The CVS Health is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 110,730 in CVS Health on August 25, 2024 and sell it today you would earn a total of 7,970 from holding CVS Health or generate 7.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 97.67% |
Values | Daily Returns |
Samsung Electronics Co vs. CVS Health
Performance |
Timeline |
Samsung Electronics |
CVS Health |
Samsung Electronics and CVS Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Samsung Electronics and CVS Health
The main advantage of trading using opposite Samsung Electronics and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.Samsung Electronics vs. Monster Beverage Corp | Samsung Electronics vs. DXC Technology | Samsung Electronics vs. Deutsche Bank Aktiengesellschaft | Samsung Electronics vs. Cognizant Technology Solutions |
CVS Health vs. Glencore plc | CVS Health vs. iShares Trust | CVS Health vs. US Bancorp | CVS Health vs. American Express |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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