Correlation Between Samsung Electronics and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Alibaba Group 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 Alibaba Group 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 Alibaba Group Holding, you can compare the effects of market volatilities on Samsung Electronics and Alibaba Group 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 Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Alibaba Group.
Diversification Opportunities for Samsung Electronics and Alibaba Group
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and Alibaba is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding 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 Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Alibaba Group go up and down completely randomly.
Pair Corralation between Samsung Electronics and Alibaba Group
Assuming the 90 days horizon Samsung Electronics Co is expected to under-perform the Alibaba Group. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.38 times less risky than Alibaba Group. The stock trades about -0.01 of its potential returns per unit of risk. The Alibaba Group Holding is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,232 in Alibaba Group Holding on September 3, 2024 and sell it today you would lose (182.00) from holding Alibaba Group Holding or give up 14.77% 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. Alibaba Group Holding
Performance |
| Timeline |
| Samsung Electronics |
| Alibaba Group Holding |
Samsung Electronics and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Alibaba Group
The main advantage of trading using opposite Samsung Electronics and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.| Samsung Electronics vs. ARISTOCRAT LEISURE | Samsung Electronics vs. Universal Display | Samsung Electronics vs. PLAYTIKA HOLDING DL 01 | Samsung Electronics vs. TRAVEL LEISURE DL 01 |
| Alibaba Group vs. Apple Inc | Alibaba Group vs. Apple Inc | Alibaba Group vs. Apple Inc | Alibaba Group vs. Apple Inc |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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