Correlation Between Samsung Electronics and ALLEGROEU
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and ALLEGROEU 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 ALLEGROEU 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 ALLEGROEU ZY 01, you can compare the effects of market volatilities on Samsung Electronics and ALLEGROEU 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 ALLEGROEU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and ALLEGROEU.
Diversification Opportunities for Samsung Electronics and ALLEGROEU
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and ALLEGROEU is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and ALLEGROEU ZY 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLEGROEU ZY 01 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 ALLEGROEU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLEGROEU ZY 01 has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and ALLEGROEU go up and down completely randomly.
Pair Corralation between Samsung Electronics and ALLEGROEU
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the ALLEGROEU. In addition to that, Samsung Electronics is 1.07 times more volatile than ALLEGROEU ZY 01. It trades about -0.11 of its total potential returns per unit of risk. ALLEGROEU ZY 01 is currently generating about -0.09 per unit of volatility. If you would invest 851.00 in ALLEGROEU ZY 01 on September 3, 2024 and sell it today you would lose (210.00) from holding ALLEGROEU ZY 01 or give up 24.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. ALLEGROEU ZY 01
Performance |
| Timeline |
| Samsung Electronics |
| ALLEGROEU ZY 01 |
Samsung Electronics and ALLEGROEU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and ALLEGROEU
The main advantage of trading using opposite Samsung Electronics and ALLEGROEU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, ALLEGROEU 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 ALLEGROEU will offset losses from the drop in ALLEGROEU's long position.| Samsung Electronics vs. ELMOS SEMICONDUCTOR | Samsung Electronics vs. Ping An Insurance | Samsung Electronics vs. NXP Semiconductors NV | Samsung Electronics vs. American Eagle Outfitters |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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