Correlation Between Samsung Electronics and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Fast Retailing 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 Fast Retailing 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 Fast Retailing Co, you can compare the effects of market volatilities on Samsung Electronics and Fast Retailing 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 Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Fast Retailing.
Diversification Opportunities for Samsung Electronics and Fast Retailing
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Samsung and Fast is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Fast Retailing go up and down completely randomly.
Pair Corralation between Samsung Electronics and Fast Retailing
Assuming the 90 days horizon Samsung Electronics Co is expected to under-perform the Fast Retailing. In addition to that, Samsung Electronics is 1.46 times more volatile than Fast Retailing Co. It trades about -0.01 of its total potential returns per unit of risk. Fast Retailing Co is currently generating about 0.06 per unit of volatility. If you would invest 20,600 in Fast Retailing Co on November 28, 2024 and sell it today you would earn a total of 8,720 from holding Fast Retailing Co or generate 42.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Samsung Electronics Co vs. Fast Retailing Co
Performance |
| Timeline |
| Samsung Electronics |
| Fast Retailing |
Samsung Electronics and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Fast Retailing
The main advantage of trading using opposite Samsung Electronics and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.| Samsung Electronics vs. LEONS FURNITURE | Samsung Electronics vs. Take Two Interactive Software | Samsung Electronics vs. FORMPIPE SOFTWARE AB | Samsung Electronics vs. American Homes 4 |
| Fast Retailing vs. G III Apparel Group | Fast Retailing vs. GRENKELEASING Dusseldorf | Fast Retailing vs. Yunnan Water Investment | Fast Retailing vs. Tamburi Investment Partners |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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