Correlation Between Smithson Investment and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Smithson Investment 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 Smithson Investment and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smithson Investment Trust and Samsung Electronics Co, you can compare the effects of market volatilities on Smithson Investment 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 Smithson Investment with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithson Investment and Samsung Electronics.
Diversification Opportunities for Smithson Investment and Samsung Electronics
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Smithson and Samsung is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Smithson Investment 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 Smithson Investment Trust 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 Smithson Investment i.e., Smithson Investment and Samsung Electronics go up and down completely randomly.
Pair Corralation between Smithson Investment and Samsung Electronics
Assuming the 90 days trading horizon Smithson Investment is expected to generate 7.7 times less return on investment than Samsung Electronics. But when comparing it to its historical volatility, Smithson Investment Trust is 2.29 times less risky than Samsung Electronics. It trades about 0.09 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 89,000 in Samsung Electronics Co on November 29, 2024 and sell it today you would earn a total of 10,450 from holding Samsung Electronics Co or generate 11.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smithson Investment Trust vs. Samsung Electronics Co
Performance |
| Timeline |
| Smithson Investment Trust |
| Samsung Electronics |
Smithson Investment and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smithson Investment and Samsung Electronics
The main advantage of trading using opposite Smithson Investment and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smithson Investment 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.| Smithson Investment vs. Naturhouse Health SA | Smithson Investment vs. Wyndham Hotels Resorts | Smithson Investment vs. CAP LEASE AVIATION | Smithson Investment vs. Bloomsbury Publishing Plc |
| Samsung Electronics vs. Tata Steel Limited | Samsung Electronics vs. JLEN Environmental Assets | Samsung Electronics vs. Associated British Foods | Samsung Electronics vs. Litigation Capital Management |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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