Correlation Between Samsung Electronics and Coffee Holding
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Coffee Holding 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 Coffee Holding 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 Coffee Holding Co, you can compare the effects of market volatilities on Samsung Electronics and Coffee Holding 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 Coffee Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Coffee Holding.
Diversification Opportunities for Samsung Electronics and Coffee Holding
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and Coffee is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Coffee Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coffee 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 Coffee Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coffee Holding has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Coffee Holding go up and down completely randomly.
Pair Corralation between Samsung Electronics and Coffee Holding
Assuming the 90 days horizon Samsung Electronics Co is expected to generate 0.42 times more return on investment than Coffee Holding. However, Samsung Electronics Co is 2.37 times less risky than Coffee Holding. It trades about -0.07 of its potential returns per unit of risk. Coffee Holding Co is currently generating about -0.2 per unit of risk. If you would invest 92,800 in Samsung Electronics Co on October 14, 2024 and sell it today you would lose (2,600) from holding Samsung Electronics Co or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Coffee Holding Co
Performance |
| Timeline |
| Samsung Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Coffee Holding |
Samsung Electronics and Coffee Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Coffee Holding
The main advantage of trading using opposite Samsung Electronics and Coffee Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Coffee Holding 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 Coffee Holding will offset losses from the drop in Coffee Holding's long position.| Samsung Electronics vs. EIDESVIK OFFSHORE NK | Samsung Electronics vs. SOLSTAD OFFSHORE NK | Samsung Electronics vs. NORTHEAST UTILITIES | Samsung Electronics vs. United Utilities Group |
| Coffee Holding vs. GWILLI FOOD | Coffee Holding vs. Richardson Electronics | Coffee Holding vs. Nomad Foods | Coffee Holding vs. Tyson Foods |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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