Correlation Between Samsung Electronics and Willis Towers
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Willis Towers 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 Willis Towers 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 Willis Towers Watson, you can compare the effects of market volatilities on Samsung Electronics and Willis Towers 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 Willis Towers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Willis Towers.
Diversification Opportunities for Samsung Electronics and Willis Towers
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Willis is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Willis Towers Watson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willis Towers Watson 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 Willis Towers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willis Towers Watson has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Willis Towers go up and down completely randomly.
Pair Corralation between Samsung Electronics and Willis Towers
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Willis Towers. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.34 times less risky than Willis Towers. The stock trades about -0.33 of its potential returns per unit of risk. The Willis Towers Watson is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 29,800 in Willis Towers Watson on November 5, 2024 and sell it today you would earn a total of 1,800 from holding Willis Towers Watson or generate 6.04% 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. Willis Towers Watson
Performance |
| Timeline |
| Samsung Electronics |
| Willis Towers Watson |
Samsung Electronics and Willis Towers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Willis Towers
The main advantage of trading using opposite Samsung Electronics and Willis Towers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Willis Towers 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 Willis Towers will offset losses from the drop in Willis Towers' long position.| Samsung Electronics vs. ANTA SPORTS PRODUCT | Samsung Electronics vs. SQUIRREL MEDIA SA | Samsung Electronics vs. British American Tobacco | Samsung Electronics vs. Universal Entertainment |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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