Correlation Between Samsung Electronics and Relx PLC
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Relx 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 Relx 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 Relx PLC ADR, you can compare the effects of market volatilities on Samsung Electronics and Relx 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 Relx PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Relx PLC.
Diversification Opportunities for Samsung Electronics and Relx PLC
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and Relx is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Relx PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relx PLC ADR 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 Relx PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relx PLC ADR has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Relx PLC go up and down completely randomly.
Pair Corralation between Samsung Electronics and Relx PLC
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Relx PLC. In addition to that, Samsung Electronics is 1.63 times more volatile than Relx PLC ADR. It trades about -0.12 of its total potential returns per unit of risk. Relx PLC ADR is currently generating about 0.09 per unit of volatility. If you would invest 4,180 in Relx PLC ADR on November 3, 2024 and sell it today you would earn a total of 620.00 from holding Relx PLC ADR or generate 14.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Relx PLC ADR
Performance |
| Timeline |
| Samsung Electronics |
| Relx PLC ADR |
Samsung Electronics and Relx PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Relx PLC
The main advantage of trading using opposite Samsung Electronics and Relx PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Relx 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 Relx PLC will offset losses from the drop in Relx PLC's long position.| Samsung Electronics vs. EVS Broadcast Equipment | Samsung Electronics vs. Ryanair Holdings plc | Samsung Electronics vs. Altair Engineering | Samsung Electronics vs. NORWEGIAN AIR SHUT |
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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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