Correlation Between Samsung Electronics and Safran SA
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Safran SA 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 Safran SA 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 Safran SA, you can compare the effects of market volatilities on Samsung Electronics and Safran SA 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 Safran SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Safran SA.
Diversification Opportunities for Samsung Electronics and Safran SA
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Safran is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Safran SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safran SA 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 Safran SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safran SA has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Safran SA go up and down completely randomly.
Pair Corralation between Samsung Electronics and Safran SA
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 2.0 times more return on investment than Safran SA. However, Samsung Electronics is 2.0 times more volatile than Safran SA. It trades about 0.05 of its potential returns per unit of risk. Safran SA is currently generating about 0.09 per unit of risk. If you would invest 96,600 in Samsung Electronics Co on August 29, 2024 and sell it today you would earn a total of 2,400 from holding Samsung Electronics Co or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Safran SA
Performance |
| Timeline |
| Samsung Electronics |
| Safran SA |
Samsung Electronics and Safran SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Safran SA
The main advantage of trading using opposite Samsung Electronics and Safran SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Safran SA 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 Safran SA will offset losses from the drop in Safran SA's long position.| Samsung Electronics vs. RELIANCE STEEL AL | Samsung Electronics vs. Daido Steel Co | Samsung Electronics vs. COSMOSTEEL HLDGS | Samsung Electronics vs. FAST RETAIL ADR |
| Safran SA vs. DXC Technology Co | Safran SA vs. FANDIFI TECHNOLOGY P | Safran SA vs. DOCDATA | Safran SA vs. Datang International Power |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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