Correlation Between Samsung Electronics and PROSUS NV
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and PROSUS NV 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 PROSUS NV 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 PROSUS NV ADR, you can compare the effects of market volatilities on Samsung Electronics and PROSUS NV 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 PROSUS NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and PROSUS NV.
Diversification Opportunities for Samsung Electronics and PROSUS NV
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and PROSUS is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and PROSUS NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROSUS NV 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 PROSUS NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROSUS NV ADR has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and PROSUS NV go up and down completely randomly.
Pair Corralation between Samsung Electronics and PROSUS NV
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 2.79 times more return on investment than PROSUS NV. However, Samsung Electronics is 2.79 times more volatile than PROSUS NV ADR. It trades about 0.01 of its potential returns per unit of risk. PROSUS NV ADR is currently generating about -0.18 per unit of risk. If you would invest 81,000 in Samsung Electronics Co on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Samsung Electronics Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Samsung Electronics Co vs. PROSUS NV ADR
Performance |
| Timeline |
| Samsung Electronics |
| PROSUS NV ADR |
Samsung Electronics and PROSUS NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and PROSUS NV
The main advantage of trading using opposite Samsung Electronics and PROSUS NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, PROSUS NV 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 PROSUS NV will offset losses from the drop in PROSUS NV's long position.The idea behind Samsung Electronics Co and PROSUS NV ADR 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.| PROSUS NV vs. Alphabet Class A | PROSUS NV vs. Alphabet Class A | PROSUS NV vs. Alphabet | PROSUS NV vs. Meta Platforms |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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