Correlation Between Samsung Electronics and Tencent Holdings
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Tencent Holdings 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 Tencent Holdings 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 Tencent Holdings Ltd, you can compare the effects of market volatilities on Samsung Electronics and Tencent Holdings 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 Tencent Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Tencent Holdings.
Diversification Opportunities for Samsung Electronics and Tencent Holdings
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Tencent is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Tencent Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings 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 Tencent Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tencent Holdings has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Tencent Holdings go up and down completely randomly.
Pair Corralation between Samsung Electronics and Tencent Holdings
Assuming the 90 days horizon Samsung Electronics Co is expected to generate 1.42 times more return on investment than Tencent Holdings. However, Samsung Electronics is 1.42 times more volatile than Tencent Holdings Ltd. It trades about 0.01 of its potential returns per unit of risk. Tencent Holdings Ltd is currently generating about -0.08 per unit of risk. If you would invest 98,000 in Samsung Electronics Co on August 28, 2024 and sell it today you would lose (200.00) from holding Samsung Electronics Co or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Tencent Holdings Ltd
Performance |
| Timeline |
| Samsung Electronics |
| Tencent Holdings |
Samsung Electronics and Tencent Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Tencent Holdings
The main advantage of trading using opposite Samsung Electronics and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Tencent Holdings 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 Tencent Holdings will offset losses from the drop in Tencent Holdings' long position.| Samsung Electronics vs. Amazon Inc | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tesla Inc | Samsung Electronics vs. Alphabet Class A |
| Tencent Holdings vs. TROPHY GAMES DEV | Tencent Holdings vs. Penn National Gaming | Tencent Holdings vs. Air Transport Services | Tencent Holdings vs. Fukuyama Transporting Co |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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