Correlation Between Samsung Electronics and Enbridge
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Enbridge 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 Enbridge 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 Enbridge, you can compare the effects of market volatilities on Samsung Electronics and Enbridge 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 Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Enbridge.
Diversification Opportunities for Samsung Electronics and Enbridge
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Enbridge is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge 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 Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Enbridge go up and down completely randomly.
Pair Corralation between Samsung Electronics and Enbridge
Assuming the 90 days horizon Samsung Electronics Co is expected to under-perform the Enbridge. In addition to that, Samsung Electronics is 1.62 times more volatile than Enbridge. It trades about 0.0 of its total potential returns per unit of risk. Enbridge is currently generating about 0.06 per unit of volatility. If you would invest 3,084 in Enbridge on August 28, 2024 and sell it today you would earn a total of 1,020 from holding Enbridge or generate 33.07% 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. Enbridge
Performance |
| Timeline |
| Samsung Electronics |
| Enbridge |
Samsung Electronics and Enbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Enbridge
The main advantage of trading using opposite Samsung Electronics and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Enbridge 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 Enbridge will offset losses from the drop in Enbridge's long position.| Samsung Electronics vs. Amazon Inc | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tesla Inc | Samsung Electronics vs. Alphabet Class A |
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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