Correlation Between Samsung Electronics and China Resources
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and China Resources 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 China Resources 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 China Resources Beer, you can compare the effects of market volatilities on Samsung Electronics and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and China Resources.
Diversification Opportunities for Samsung Electronics and China Resources
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samsung and China is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and China Resources go up and down completely randomly.
Pair Corralation between Samsung Electronics and China Resources
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.81 times more return on investment than China Resources. However, Samsung Electronics Co is 1.24 times less risky than China Resources. It trades about -0.03 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.15 per unit of risk. If you would invest 73,400 in Samsung Electronics Co on October 29, 2024 and sell it today you would lose (1,200) from holding Samsung Electronics Co or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. China Resources Beer
Performance |
| Timeline |
| Samsung Electronics |
| China Resources Beer |
Samsung Electronics and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and China Resources
The main advantage of trading using opposite Samsung Electronics and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
| China Resources vs. Geely Automobile Holdings | China Resources vs. MeVis Medical Solutions | China Resources vs. CVR Medical Corp | China Resources vs. MEDICAL FACILITIES NEW |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |