Correlation Between Samsung Electronics and UFP Industries
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and UFP Industries 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 UFP Industries 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 UFP Industries, you can compare the effects of market volatilities on Samsung Electronics and UFP Industries 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 UFP Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and UFP Industries.
Diversification Opportunities for Samsung Electronics and UFP Industries
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and UFP is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and UFP Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UFP Industries 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 UFP Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UFP Industries has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and UFP Industries go up and down completely randomly.
Pair Corralation between Samsung Electronics and UFP Industries
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the UFP Industries. In addition to that, Samsung Electronics is 1.29 times more volatile than UFP Industries. It trades about -0.05 of its total potential returns per unit of risk. UFP Industries is currently generating about 0.13 per unit of volatility. If you would invest 11,640 in UFP Industries on August 30, 2024 and sell it today you would earn a total of 1,355 from holding UFP Industries or generate 11.64% 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. UFP Industries
Performance |
| Timeline |
| Samsung Electronics |
| UFP Industries |
Samsung Electronics and UFP Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and UFP Industries
The main advantage of trading using opposite Samsung Electronics and UFP Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, UFP Industries 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 UFP Industries will offset losses from the drop in UFP Industries' long position.The idea behind Samsung Electronics Co and UFP Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| UFP Industries vs. Svenska Cellulosa Aktiebolaget | UFP Industries vs. Superior Plus Corp | UFP Industries vs. NMI Holdings | UFP Industries vs. SIVERS SEMICONDUCTORS AB |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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