Correlation Between Spirent Communications and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and Samsung Electronics 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 Spirent Communications and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Samsung Electronics Co, you can compare the effects of market volatilities on Spirent Communications and Samsung Electronics 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 Spirent Communications with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Samsung Electronics.
Diversification Opportunities for Spirent Communications and Samsung Electronics
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Spirent and Samsung is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Spirent Communications i.e., Spirent Communications and Samsung Electronics go up and down completely randomly.
Pair Corralation between Spirent Communications and Samsung Electronics
Assuming the 90 days trading horizon Spirent Communications plc is expected to generate 0.56 times more return on investment than Samsung Electronics. However, Spirent Communications plc is 1.77 times less risky than Samsung Electronics. It trades about 0.16 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.35 per unit of risk. If you would invest 17,030 in Spirent Communications plc on September 22, 2024 and sell it today you would earn a total of 620.00 from holding Spirent Communications plc or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Samsung Electronics Co
Performance |
| Timeline |
| Spirent Communications |
| Samsung Electronics |
Spirent Communications and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Samsung Electronics
The main advantage of trading using opposite Spirent Communications and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, Samsung Electronics 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.| Spirent Communications vs. Hochschild Mining plc | Spirent Communications vs. GoldMining | Spirent Communications vs. European Metals Holdings | Spirent Communications vs. Bloomsbury Publishing Plc |
| Samsung Electronics vs. Spirent Communications plc | Samsung Electronics vs. Games Workshop Group | Samsung Electronics vs. Gamma Communications PLC | Samsung Electronics vs. Evolution Gaming Group |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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