Correlation Between Samsung Electronics and WESCO International
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and WESCO International 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 WESCO International 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 WESCO International, you can compare the effects of market volatilities on Samsung Electronics and WESCO International 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 WESCO International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and WESCO International.
Diversification Opportunities for Samsung Electronics and WESCO International
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Samsung and WESCO is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and WESCO International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESCO International 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 WESCO International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESCO International has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and WESCO International go up and down completely randomly.
Pair Corralation between Samsung Electronics and WESCO International
Assuming the 90 days horizon Samsung Electronics Co is expected to under-perform the WESCO International. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.46 times less risky than WESCO International. The stock trades about -0.02 of its potential returns per unit of risk. The WESCO International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 14,007 in WESCO International on November 2, 2024 and sell it today you would earn a total of 3,793 from holding WESCO International or generate 27.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Samsung Electronics Co vs. WESCO International
Performance |
| Timeline |
| Samsung Electronics |
| WESCO International |
Samsung Electronics and WESCO International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and WESCO International
The main advantage of trading using opposite Samsung Electronics and WESCO International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, WESCO International 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 WESCO International will offset losses from the drop in WESCO International's long position.| Samsung Electronics vs. Commercial Vehicle Group | Samsung Electronics vs. CARSALESCOM | Samsung Electronics vs. Sanyo Chemical Industries | Samsung Electronics vs. Darden Restaurants |
| WESCO International vs. STMICROELECTRONICS | WESCO International vs. Salesforce | WESCO International vs. GungHo Online Entertainment | WESCO International vs. TT Electronics PLC |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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