Correlation Between Samsung Electronics and Medtronic PLC
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Medtronic PLC 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 Medtronic PLC 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 Medtronic PLC, you can compare the effects of market volatilities on Samsung Electronics and Medtronic PLC 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 Medtronic PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Medtronic PLC.
Diversification Opportunities for Samsung Electronics and Medtronic PLC
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Medtronic is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Medtronic PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medtronic PLC 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 Medtronic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medtronic PLC has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Medtronic PLC go up and down completely randomly.
Pair Corralation between Samsung Electronics and Medtronic PLC
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Medtronic PLC. In addition to that, Samsung Electronics is 1.25 times more volatile than Medtronic PLC. It trades about -0.02 of its total potential returns per unit of risk. Medtronic PLC is currently generating about 0.03 per unit of volatility. If you would invest 6,989 in Medtronic PLC on September 3, 2024 and sell it today you would earn a total of 1,118 from holding Medtronic PLC or generate 16.0% 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. Medtronic PLC
Performance |
| Timeline |
| Samsung Electronics |
| Medtronic PLC |
Samsung Electronics and Medtronic PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Medtronic PLC
The main advantage of trading using opposite Samsung Electronics and Medtronic PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Medtronic PLC 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 Medtronic PLC will offset losses from the drop in Medtronic PLC's long position.| Samsung Electronics vs. Quaker Chemical | Samsung Electronics vs. TIANDE CHEMICAL | Samsung Electronics vs. CARSALESCOM | Samsung Electronics vs. AIR PRODCHEMICALS |
| Medtronic PLC vs. JD SPORTS FASH | Medtronic PLC vs. TOWNSQUARE MEDIA INC | Medtronic PLC vs. EHEALTH | Medtronic PLC vs. Ubisoft Entertainment SA |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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