Correlation Between Samsung Electronics and Federal Home
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Federal Home 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 Federal Home 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 Federal Home Loan, you can compare the effects of market volatilities on Samsung Electronics and Federal Home 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 Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Federal Home.
Diversification Opportunities for Samsung Electronics and Federal Home
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and Federal is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Federal Home Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home Loan 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 Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home Loan has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Federal Home go up and down completely randomly.
Pair Corralation between Samsung Electronics and Federal Home
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 127.1 times less return on investment than Federal Home. But when comparing it to its historical volatility, Samsung Electronics Co is 4.54 times less risky than Federal Home. It trades about 0.02 of its potential returns per unit of risk. Federal Home Loan is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 238.00 in Federal Home Loan on October 15, 2024 and sell it today you would earn a total of 256.00 from holding Federal Home Loan or generate 107.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Federal Home Loan
Performance |
| Timeline |
| Samsung Electronics |
| Federal Home Loan |
Samsung Electronics and Federal Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Federal Home
The main advantage of trading using opposite Samsung Electronics and Federal Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Federal Home 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 Federal Home will offset losses from the drop in Federal Home's long position.| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
| Federal Home vs. PRECISION DRILLING P | Federal Home vs. Gaztransport Technigaz SA | Federal Home vs. Fukuyama Transporting Co | Federal Home vs. ETFS Coffee ETC |
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 CEOs Directory module to screen CEOs from public companies around the world.
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