Correlation Between Samsung Electronics and LOral SA
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and LOral SA 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 LOral SA 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 LOral SA, you can compare the effects of market volatilities on Samsung Electronics and LOral SA 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 LOral SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and LOral SA.
Diversification Opportunities for Samsung Electronics and LOral SA
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and LOral is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and LOral SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOral SA 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 LOral SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOral SA has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and LOral SA go up and down completely randomly.
Pair Corralation between Samsung Electronics and LOral SA
Assuming the 90 days horizon Samsung Electronics Co is expected to under-perform the LOral SA. In addition to that, Samsung Electronics is 1.85 times more volatile than LOral SA. It trades about -0.08 of its total potential returns per unit of risk. LOral SA is currently generating about -0.15 per unit of volatility. If you would invest 34,555 in LOral SA on September 2, 2024 and sell it today you would lose (1,770) from holding LOral SA or give up 5.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. LOral SA
Performance |
| Timeline |
| Samsung Electronics |
| LOral SA |
Samsung Electronics and LOral SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and LOral SA
The main advantage of trading using opposite Samsung Electronics and LOral SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, LOral SA 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 LOral SA will offset losses from the drop in LOral SA's long position.| Samsung Electronics vs. SLR Investment Corp | Samsung Electronics vs. APPLIED MATERIALS | Samsung Electronics vs. Mitsubishi Materials | Samsung Electronics vs. REGAL ASIAN INVESTMENTS |
| LOral SA vs. Gladstone Investment | LOral SA vs. REGAL ASIAN INVESTMENTS | LOral SA vs. NorAm Drilling AS | LOral SA vs. PRECISION DRILLING P |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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