Correlation Between Samsung Electronics and Peabody Energy
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Peabody Energy 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 Peabody Energy 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 Peabody Energy, you can compare the effects of market volatilities on Samsung Electronics and Peabody Energy 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 Peabody Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Peabody Energy.
Diversification Opportunities for Samsung Electronics and Peabody Energy
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Peabody is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Peabody Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peabody Energy 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 Peabody Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peabody Energy has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Peabody Energy go up and down completely randomly.
Pair Corralation between Samsung Electronics and Peabody Energy
Assuming the 90 days horizon Samsung Electronics Co is expected to under-perform the Peabody Energy. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.15 times less risky than Peabody Energy. The stock trades about -0.16 of its potential returns per unit of risk. The Peabody Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,039 in Peabody Energy on September 3, 2024 and sell it today you would earn a total of 234.00 from holding Peabody Energy or generate 11.48% 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. Peabody Energy
Performance |
| Timeline |
| Samsung Electronics |
| Peabody Energy |
Samsung Electronics and Peabody Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Peabody Energy
The main advantage of trading using opposite Samsung Electronics and Peabody Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Peabody Energy 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 Peabody Energy will offset losses from the drop in Peabody Energy'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 |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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