Correlation Between Samsung Electronics and WHIRLPOOL
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and WHIRLPOOL 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 WHIRLPOOL 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 WHIRLPOOL, you can compare the effects of market volatilities on Samsung Electronics and WHIRLPOOL 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 WHIRLPOOL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and WHIRLPOOL.
Diversification Opportunities for Samsung Electronics and WHIRLPOOL
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and WHIRLPOOL is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and WHIRLPOOL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHIRLPOOL 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 WHIRLPOOL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHIRLPOOL has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and WHIRLPOOL go up and down completely randomly.
Pair Corralation between Samsung Electronics and WHIRLPOOL
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the WHIRLPOOL. In addition to that, Samsung Electronics is 1.51 times more volatile than WHIRLPOOL. It trades about -0.13 of its total potential returns per unit of risk. WHIRLPOOL is currently generating about 0.25 per unit of volatility. If you would invest 9,510 in WHIRLPOOL on September 4, 2024 and sell it today you would earn a total of 1,080 from holding WHIRLPOOL or generate 11.36% 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. WHIRLPOOL
Performance |
| Timeline |
| Samsung Electronics |
| WHIRLPOOL |
Samsung Electronics and WHIRLPOOL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and WHIRLPOOL
The main advantage of trading using opposite Samsung Electronics and WHIRLPOOL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, WHIRLPOOL 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 WHIRLPOOL will offset losses from the drop in WHIRLPOOL's long position.The idea behind Samsung Electronics Co and WHIRLPOOL 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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