Correlation Between Samsung Electronics and E3 LITHIUM
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and E3 LITHIUM 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 E3 LITHIUM 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 E3 LITHIUM LTD, you can compare the effects of market volatilities on Samsung Electronics and E3 LITHIUM 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 E3 LITHIUM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and E3 LITHIUM.
Diversification Opportunities for Samsung Electronics and E3 LITHIUM
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and OW3 is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and E3 LITHIUM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E3 LITHIUM LTD 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 E3 LITHIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E3 LITHIUM LTD has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and E3 LITHIUM go up and down completely randomly.
Pair Corralation between Samsung Electronics and E3 LITHIUM
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.39 times more return on investment than E3 LITHIUM. However, Samsung Electronics Co is 2.59 times less risky than E3 LITHIUM. It trades about -0.02 of its potential returns per unit of risk. E3 LITHIUM LTD is currently generating about -0.02 per unit of risk. If you would invest 97,558 in Samsung Electronics Co on November 7, 2024 and sell it today you would lose (24,958) from holding Samsung Electronics Co or give up 25.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. E3 LITHIUM LTD
Performance |
| Timeline |
| Samsung Electronics |
| E3 LITHIUM LTD |
Samsung Electronics and E3 LITHIUM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and E3 LITHIUM
The main advantage of trading using opposite Samsung Electronics and E3 LITHIUM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, E3 LITHIUM 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 E3 LITHIUM will offset losses from the drop in E3 LITHIUM's 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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