Correlation Between Samsung Electronics and Look Holdings
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Look Holdings 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 Look Holdings 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 Look Holdings, you can compare the effects of market volatilities on Samsung Electronics and Look Holdings 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 Look Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Look Holdings.
Diversification Opportunities for Samsung Electronics and Look Holdings
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and Look is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Look Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Look Holdings 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 Look Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Look Holdings has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Look Holdings go up and down completely randomly.
Pair Corralation between Samsung Electronics and Look Holdings
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Look Holdings. In addition to that, Samsung Electronics is 7.63 times more volatile than Look Holdings. It trades about -0.03 of its total potential returns per unit of risk. Look Holdings is currently generating about 0.43 per unit of volatility. If you would invest 1,540 in Look Holdings on September 4, 2024 and sell it today you would earn a total of 60.00 from holding Look Holdings or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Look Holdings
Performance |
| Timeline |
| Samsung Electronics |
| Look Holdings |
Samsung Electronics and Look Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Look Holdings
The main advantage of trading using opposite Samsung Electronics and Look Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Look Holdings 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 Look Holdings will offset losses from the drop in Look Holdings' long position.| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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