Correlation Between Samsung Electronics and Intel
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Intel 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 Intel 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 Intel, you can compare the effects of market volatilities on Samsung Electronics and Intel 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 Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Intel.
Diversification Opportunities for Samsung Electronics and Intel
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Intel is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Intel go up and down completely randomly.
Pair Corralation between Samsung Electronics and Intel
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Intel. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.08 times less risky than Intel. The stock trades about -0.09 of its potential returns per unit of risk. The Intel is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,040 in Intel on September 4, 2024 and sell it today you would earn a total of 343.00 from holding Intel or generate 16.81% 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. Intel
Performance |
| Timeline |
| Samsung Electronics |
| Intel |
Samsung Electronics and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Intel
The main advantage of trading using opposite Samsung Electronics and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.The idea behind Samsung Electronics Co and Intel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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