Correlation Between Samsung Electronics and Komatsu
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Komatsu 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 Komatsu 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 Komatsu, you can compare the effects of market volatilities on Samsung Electronics and Komatsu 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 Komatsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Komatsu.
Diversification Opportunities for Samsung Electronics and Komatsu
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Komatsu is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Komatsu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komatsu 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 Komatsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komatsu has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Komatsu go up and down completely randomly.
Pair Corralation between Samsung Electronics and Komatsu
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 3.72 times less return on investment than Komatsu. In addition to that, Samsung Electronics is 1.51 times more volatile than Komatsu. It trades about 0.02 of its total potential returns per unit of risk. Komatsu is currently generating about 0.14 per unit of volatility. If you would invest 2,594 in Komatsu on October 25, 2024 and sell it today you would earn a total of 88.00 from holding Komatsu or generate 3.39% 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. Komatsu
Performance |
| Timeline |
| Samsung Electronics |
| Komatsu |
Samsung Electronics and Komatsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Komatsu
The main advantage of trading using opposite Samsung Electronics and Komatsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Komatsu 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 Komatsu will offset losses from the drop in Komatsu's long position.| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
| Komatsu vs. TAL Education Group | Komatsu vs. Samsung Electronics Co | Komatsu vs. DEVRY EDUCATION GRP | Komatsu vs. Delta Electronics Public |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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