Correlation Between Samsung Electronics and AutoZone
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and AutoZone 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 AutoZone 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 AutoZone, you can compare the effects of market volatilities on Samsung Electronics and AutoZone 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 AutoZone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and AutoZone.
Diversification Opportunities for Samsung Electronics and AutoZone
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and AutoZone is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone 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 AutoZone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoZone has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and AutoZone go up and down completely randomly.
Pair Corralation between Samsung Electronics and AutoZone
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the AutoZone. In addition to that, Samsung Electronics is 1.56 times more volatile than AutoZone. It trades about -0.02 of its total potential returns per unit of risk. AutoZone is currently generating about 0.2 per unit of volatility. If you would invest 277,800 in AutoZone on August 31, 2024 and sell it today you would earn a total of 23,700 from holding AutoZone or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Samsung Electronics Co vs. AutoZone
Performance |
| Timeline |
| Samsung Electronics |
| AutoZone |
Samsung Electronics and AutoZone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and AutoZone
The main advantage of trading using opposite Samsung Electronics and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, AutoZone 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 AutoZone will offset losses from the drop in AutoZone's long position.| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
| AutoZone vs. BJs Restaurants | AutoZone vs. Darden Restaurants | AutoZone vs. SAFETY MEDICAL PROD | AutoZone vs. Treasury Wine Estates |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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