Correlation Between Samsung Electronics and Yamaha
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Yamaha 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 Yamaha 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 Yamaha Motor Co, you can compare the effects of market volatilities on Samsung Electronics and Yamaha 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 Yamaha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Yamaha.
Diversification Opportunities for Samsung Electronics and Yamaha
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Yamaha is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Yamaha Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yamaha Motor 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 Yamaha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yamaha Motor has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Yamaha go up and down completely randomly.
Pair Corralation between Samsung Electronics and Yamaha
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 1.66 times less return on investment than Yamaha. In addition to that, Samsung Electronics is 1.78 times more volatile than Yamaha Motor Co. It trades about 0.03 of its total potential returns per unit of risk. Yamaha Motor Co is currently generating about 0.09 per unit of volatility. If you would invest 791.00 in Yamaha Motor Co on August 27, 2024 and sell it today you would earn a total of 23.00 from holding Yamaha Motor Co or generate 2.91% 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. Yamaha Motor Co
Performance |
| Timeline |
| Samsung Electronics |
| Yamaha Motor |
Samsung Electronics and Yamaha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Yamaha
The main advantage of trading using opposite Samsung Electronics and Yamaha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Yamaha 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 Yamaha will offset losses from the drop in Yamaha's long position.| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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