Correlation Between Samsung Electronics and Target
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Target 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 Target 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 Target, you can compare the effects of market volatilities on Samsung Electronics and Target 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 Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Target.
Diversification Opportunities for Samsung Electronics and Target
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Samsung and Target is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Target go up and down completely randomly.
Pair Corralation between Samsung Electronics and Target
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.5 times more return on investment than Target. However, Samsung Electronics Co is 2.0 times less risky than Target. It trades about -0.14 of its potential returns per unit of risk. Target is currently generating about -0.08 per unit of risk. If you would invest 2,150,000 in Samsung Electronics Co on September 3, 2024 and sell it today you would lose (157,494) from holding Samsung Electronics Co or give up 7.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Target
Performance |
| Timeline |
| Samsung Electronics |
| Target |
Samsung Electronics and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Target
The main advantage of trading using opposite Samsung Electronics and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Samsung Electronics vs. Apple Inc | Samsung Electronics vs. The Select Sector | Samsung Electronics vs. Promotora y Operadora | Samsung Electronics vs. SPDR Series Trust |
| Target vs. DXC Technology | Target vs. Capital One Financial | Target vs. Delta Air Lines | Target 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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