Correlation Between Samsung Electronics and Richardson Electronics
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Richardson Electronics 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 Richardson Electronics 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 Richardson Electronics, you can compare the effects of market volatilities on Samsung Electronics and Richardson Electronics 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 Richardson Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Richardson Electronics.
Diversification Opportunities for Samsung Electronics and Richardson Electronics
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Richardson is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Richardson Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richardson Electronics 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 Richardson Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richardson Electronics has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Richardson Electronics go up and down completely randomly.
Pair Corralation between Samsung Electronics and Richardson Electronics
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.43 times more return on investment than Richardson Electronics. However, Samsung Electronics Co is 2.33 times less risky than Richardson Electronics. It trades about 0.0 of its potential returns per unit of risk. Richardson Electronics is currently generating about 0.0 per unit of risk. If you would invest 91,915 in Samsung Electronics Co on August 27, 2024 and sell it today you would lose (8,915) from holding Samsung Electronics Co or give up 9.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Richardson Electronics
Performance |
| Timeline |
| Samsung Electronics |
| Richardson Electronics |
Samsung Electronics and Richardson Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Richardson Electronics
The main advantage of trading using opposite Samsung Electronics and Richardson Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Richardson Electronics 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 Richardson Electronics will offset losses from the drop in Richardson Electronics' long position.| Samsung Electronics vs. Amazon Inc | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tesla Inc | Samsung Electronics vs. Alphabet Class A |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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