Correlation Between Samsung Electronics and Carsales
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Carsales 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 Carsales 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 Carsales, you can compare the effects of market volatilities on Samsung Electronics and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Carsales.
Diversification Opportunities for Samsung Electronics and Carsales
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Carsales is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carsales has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Carsales go up and down completely randomly.
Pair Corralation between Samsung Electronics and Carsales
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Carsales. In addition to that, Samsung Electronics is 2.24 times more volatile than Carsales. It trades about -0.07 of its total potential returns per unit of risk. Carsales is currently generating about 0.41 per unit of volatility. If you would invest 2,240 in Carsales on August 24, 2024 and sell it today you would earn a total of 280.00 from holding Carsales or generate 12.5% 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. Carsales
Performance |
| Timeline |
| Samsung Electronics |
| Carsales |
Samsung Electronics and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Carsales
The main advantage of trading using opposite Samsung Electronics and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
| Carsales vs. Beyond Meat | Carsales vs. CN MODERN DAIRY | Carsales vs. United Natural Foods | Carsales vs. Austevoll Seafood ASA |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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