Correlation Between Samsung Electronics and American States
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and American States 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 American States 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 American States Water, you can compare the effects of market volatilities on Samsung Electronics and American States 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 American States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and American States.
Diversification Opportunities for Samsung Electronics and American States
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and American is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and American States Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American States Water 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 American States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American States Water has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and American States go up and down completely randomly.
Pair Corralation between Samsung Electronics and American States
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the American States. In addition to that, Samsung Electronics is 1.48 times more volatile than American States Water. It trades about -0.01 of its total potential returns per unit of risk. American States Water is currently generating about 0.02 per unit of volatility. If you would invest 7,633 in American States Water on August 26, 2024 and sell it today you would earn a total of 327.00 from holding American States Water or generate 4.28% 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. American States Water
Performance |
| Timeline |
| Samsung Electronics |
| American States Water |
Samsung Electronics and American States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and American States
The main advantage of trading using opposite Samsung Electronics and American States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, American States 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 American States will offset losses from the drop in American States' long position.| Samsung Electronics vs. Amazon Inc | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tesla Inc | Samsung Electronics vs. Alphabet Class A |
| American States vs. MEDICAL FACILITIES NEW | American States vs. Public Storage | American States vs. SBM OFFSHORE | American States vs. DATAGROUP SE |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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