Correlation Between Samsung Electronics and China New
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and China New 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 China New 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 China New Energy, you can compare the effects of market volatilities on Samsung Electronics and China New 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 China New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and China New.
Diversification Opportunities for Samsung Electronics and China New
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and China is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and China New Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China New Energy 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 China New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China New Energy has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and China New go up and down completely randomly.
Pair Corralation between Samsung Electronics and China New
Assuming the 90 days horizon Samsung Electronics is expected to generate 393.78 times less return on investment than China New. But when comparing it to its historical volatility, Samsung Electronics Co is 588.73 times less risky than China New. It trades about 0.13 of its potential returns per unit of risk. China New Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.50 in China New Energy on September 3, 2024 and sell it today you would lose (0.70) from holding China New Energy or give up 46.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. China New Energy
Performance |
| Timeline |
| Samsung Electronics |
| China New Energy |
Samsung Electronics and China New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and China New
The main advantage of trading using opposite Samsung Electronics and China New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, China New 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 China New will offset losses from the drop in China New's long position.| Samsung Electronics vs. Apple Inc | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Amazon Inc | Samsung Electronics vs. Alphabet Inc Class C |
| China New vs. Manaris Corp | China New vs. Green Planet Bio | China New vs. Continental Beverage Brands | China New vs. Opus Magnum Ameris |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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