Correlation Between Samsung Electronics and United Airlines
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and United Airlines 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 United Airlines 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 United Airlines Holdings, you can compare the effects of market volatilities on Samsung Electronics and United Airlines 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and United Airlines.
Diversification Opportunities for Samsung Electronics and United Airlines
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and United is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and United Airlines go up and down completely randomly.
Pair Corralation between Samsung Electronics and United Airlines
Assuming the 90 days horizon Samsung Electronics is expected to generate 26.5 times less return on investment than United Airlines. But when comparing it to its historical volatility, Samsung Electronics Co is 38.12 times less risky than United Airlines. It trades about 0.1 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,592 in United Airlines Holdings on August 27, 2024 and sell it today you would earn a total of 4,932 from holding United Airlines Holdings or generate 107.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. United Airlines Holdings
Performance |
| Timeline |
| Samsung Electronics |
| United Airlines Holdings |
Samsung Electronics and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and United Airlines
The main advantage of trading using opposite Samsung Electronics and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| Samsung Electronics vs. Copa Holdings SA | Samsung Electronics vs. United Airlines Holdings | Samsung Electronics vs. Delta Air Lines | Samsung Electronics vs. SkyWest |
| United Airlines vs. American Airlines Group | United Airlines vs. Southwest Airlines | United Airlines vs. JetBlue Airways Corp | United Airlines vs. Spirit Airlines |
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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