Correlation Between Samsung Electronics and Corteva
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Corteva 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 Corteva 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 Corteva, you can compare the effects of market volatilities on Samsung Electronics and Corteva 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 Corteva. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Corteva.
Diversification Opportunities for Samsung Electronics and Corteva
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Corteva is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Corteva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corteva 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 Corteva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corteva has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Corteva go up and down completely randomly.
Pair Corralation between Samsung Electronics and Corteva
Assuming the 90 days horizon Samsung Electronics Co is expected to under-perform the Corteva. In addition to that, Samsung Electronics is 1.12 times more volatile than Corteva. It trades about -0.06 of its total potential returns per unit of risk. Corteva is currently generating about 0.08 per unit of volatility. If you would invest 4,234 in Corteva on September 3, 2024 and sell it today you would earn a total of 1,645 from holding Corteva or generate 38.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Corteva
Performance |
| Timeline |
| Samsung Electronics |
| Corteva |
Samsung Electronics and Corteva Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Corteva
The main advantage of trading using opposite Samsung Electronics and Corteva positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Corteva 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 Corteva will offset losses from the drop in Corteva'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 |
| Corteva vs. Public Storage | Corteva vs. Gol Intelligent Airlines | Corteva vs. Automatic Data Processing | Corteva vs. International Consolidated 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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