Correlation Between Samsung Electronics and Honeywell International
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Honeywell International 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 Honeywell International 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 Honeywell International, you can compare the effects of market volatilities on Samsung Electronics and Honeywell International 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 Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Honeywell International.
Diversification Opportunities for Samsung Electronics and Honeywell International
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Honeywell is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International 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 Honeywell International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honeywell International has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Honeywell International go up and down completely randomly.
Pair Corralation between Samsung Electronics and Honeywell International
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Honeywell International. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 2.27 times less risky than Honeywell International. The stock trades about -0.23 of its potential returns per unit of risk. The Honeywell International is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 470,157 in Honeywell International on October 29, 2024 and sell it today you would lose (3,957) from holding Honeywell International or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Honeywell International
Performance |
| Timeline |
| Samsung Electronics |
| Honeywell International |
Samsung Electronics and Honeywell International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Honeywell International
The main advantage of trading using opposite Samsung Electronics and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Honeywell International 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 Honeywell International will offset losses from the drop in Honeywell International's long position.| Samsung Electronics vs. Cognizant Technology Solutions | Samsung Electronics vs. Taiwan Semiconductor Manufacturing | Samsung Electronics vs. Verizon Communications | Samsung Electronics vs. KB Home |
| Honeywell International vs. 3M Company | Honeywell International vs. Emerson Electric Co | Honeywell International vs. iShares Global Timber | Honeywell International vs. Vanguard World |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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