Correlation Between Samsung Electronics and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and AstraZeneca PLC 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 AstraZeneca PLC 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 AstraZeneca PLC, you can compare the effects of market volatilities on Samsung Electronics and AstraZeneca PLC 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 AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and AstraZeneca PLC.
Diversification Opportunities for Samsung Electronics and AstraZeneca PLC
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and AstraZeneca is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC 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 AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between Samsung Electronics and AstraZeneca PLC
Assuming the 90 days horizon Samsung Electronics Co is expected to under-perform the AstraZeneca PLC. In addition to that, Samsung Electronics is 1.09 times more volatile than AstraZeneca PLC. It trades about -0.07 of its total potential returns per unit of risk. AstraZeneca PLC is currently generating about -0.04 per unit of volatility. If you would invest 13,195 in AstraZeneca PLC on September 3, 2024 and sell it today you would lose (365.00) from holding AstraZeneca PLC or give up 2.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. AstraZeneca PLC
Performance |
| Timeline |
| Samsung Electronics |
| AstraZeneca PLC |
Samsung Electronics and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and AstraZeneca PLC
The main advantage of trading using opposite Samsung Electronics and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC'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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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