Correlation Between Samsung Electronics and AECOM
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and AECOM 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 AECOM 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 AECOM, you can compare the effects of market volatilities on Samsung Electronics and AECOM 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 AECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and AECOM.
Diversification Opportunities for Samsung Electronics and AECOM
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and AECOM is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and AECOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM 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 AECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and AECOM go up and down completely randomly.
Pair Corralation between Samsung Electronics and AECOM
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the AECOM. In addition to that, Samsung Electronics is 1.37 times more volatile than AECOM. It trades about -0.1 of its total potential returns per unit of risk. AECOM is currently generating about 0.19 per unit of volatility. If you would invest 9,078 in AECOM on August 28, 2024 and sell it today you would earn a total of 2,222 from holding AECOM or generate 24.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. AECOM
Performance |
| Timeline |
| Samsung Electronics |
| AECOM |
Samsung Electronics and AECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and AECOM
The main advantage of trading using opposite Samsung Electronics and AECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, AECOM 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 AECOM will offset losses from the drop in AECOM's long position.| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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