Correlation Between Samsung Electronics and New HopeLimited
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and New HopeLimited 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 New HopeLimited 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 New Hope, you can compare the effects of market volatilities on Samsung Electronics and New HopeLimited 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 New HopeLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and New HopeLimited.
Diversification Opportunities for Samsung Electronics and New HopeLimited
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and New is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and New Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New HopeLimited 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 New HopeLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New HopeLimited has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and New HopeLimited go up and down completely randomly.
Pair Corralation between Samsung Electronics and New HopeLimited
Assuming the 90 days horizon Samsung Electronics Co is expected to under-perform the New HopeLimited. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.04 times less risky than New HopeLimited. The stock trades about -0.07 of its potential returns per unit of risk. The New Hope is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 291.00 in New Hope on September 3, 2024 and sell it today you would lose (4.00) from holding New Hope or give up 1.37% 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. New Hope
Performance |
| Timeline |
| Samsung Electronics |
| New HopeLimited |
Samsung Electronics and New HopeLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and New HopeLimited
The main advantage of trading using opposite Samsung Electronics and New HopeLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, New HopeLimited 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 New HopeLimited will offset losses from the drop in New HopeLimited's long position.| Samsung Electronics vs. ARISTOCRAT LEISURE | Samsung Electronics vs. Universal Display | Samsung Electronics vs. PLAYTIKA HOLDING DL 01 | Samsung Electronics vs. TRAVEL LEISURE DL 01 |
| New HopeLimited vs. China Shenhua Energy | New HopeLimited vs. PT Bayan Resources | New HopeLimited vs. Yanzhou Coal Mining | New HopeLimited vs. Yanzhou Coal Mining |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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