Correlation Between Samsung Electronics and Aqua America
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Aqua America 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 Aqua America 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 Aqua America, you can compare the effects of market volatilities on Samsung Electronics and Aqua America 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 Aqua America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Aqua America.
Diversification Opportunities for Samsung Electronics and Aqua America
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Aqua is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Aqua America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua America 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 Aqua America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua America has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Aqua America go up and down completely randomly.
Pair Corralation between Samsung Electronics and Aqua America
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Aqua America. In addition to that, Samsung Electronics is 1.3 times more volatile than Aqua America. It trades about -0.04 of its total potential returns per unit of risk. Aqua America is currently generating about 0.02 per unit of volatility. If you would invest 3,473 in Aqua America on September 12, 2024 and sell it today you would earn a total of 180.00 from holding Aqua America or generate 5.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Samsung Electronics Co vs. Aqua America
Performance |
| Timeline |
| Samsung Electronics |
| Aqua America |
Samsung Electronics and Aqua America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Aqua America
The main advantage of trading using opposite Samsung Electronics and Aqua America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Aqua America 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 Aqua America will offset losses from the drop in Aqua America's long position.| Samsung Electronics vs. MEDICAL FACILITIES NEW | Samsung Electronics vs. HOCHSCHILD MINING | Samsung Electronics vs. Diamyd Medical AB | Samsung Electronics vs. GigaMedia |
| Aqua America vs. Tower One Wireless | Aqua America vs. MAVEN WIRELESS SWEDEN | Aqua America vs. Consolidated Communications Holdings | Aqua America vs. KENEDIX OFFICE INV |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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