Correlation Between Samsung Electronics and Cascades
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Cascades 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 Cascades 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 Cascades, you can compare the effects of market volatilities on Samsung Electronics and Cascades 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 Cascades. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Cascades.
Diversification Opportunities for Samsung Electronics and Cascades
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and Cascades is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Cascades in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cascades 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 Cascades. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cascades has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Cascades go up and down completely randomly.
Pair Corralation between Samsung Electronics and Cascades
Assuming the 90 days horizon Samsung Electronics is expected to generate 3.21 times less return on investment than Cascades. But when comparing it to its historical volatility, Samsung Electronics Co is 36.18 times less risky than Cascades. It trades about 0.11 of its potential returns per unit of risk. Cascades is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 860.00 in Cascades on September 3, 2024 and sell it today you would lose (17.00) from holding Cascades or give up 1.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 78.54% |
| Values | Daily Returns |
Samsung Electronics Co vs. Cascades
Performance |
| Timeline |
| Samsung Electronics |
| Cascades |
Samsung Electronics and Cascades Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Cascades
The main advantage of trading using opposite Samsung Electronics and Cascades positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Cascades 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 Cascades will offset losses from the drop in Cascades' long position.| Samsung Electronics vs. Apple Inc | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Amazon Inc | Samsung Electronics vs. Alphabet Inc Class C |
| Cascades vs. TriMas | Cascades vs. Myers Industries | Cascades vs. Reynolds Consumer Products | Cascades vs. Pactiv Evergreen |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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