Correlation Between Samsung Electronics and LVMH Moët
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and LVMH Moët 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 LVMH Moët 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 LVMH Mot Hennessy, you can compare the effects of market volatilities on Samsung Electronics and LVMH Moët 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 LVMH Moët. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and LVMH Moët.
Diversification Opportunities for Samsung Electronics and LVMH Moët
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and LVMH is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and LVMH Mot Hennessy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LVMH Mot Hennessy 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 LVMH Moët. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LVMH Mot Hennessy has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and LVMH Moët go up and down completely randomly.
Pair Corralation between Samsung Electronics and LVMH Moët
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the LVMH Moët. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.61 times less risky than LVMH Moët. The stock trades about -0.16 of its potential returns per unit of risk. The LVMH Mot Hennessy is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 12,800 in LVMH Mot Hennessy on November 7, 2024 and sell it today you would earn a total of 1,400 from holding LVMH Mot Hennessy or generate 10.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Samsung Electronics Co vs. LVMH Mot Hennessy
Performance |
| Timeline |
| Samsung Electronics |
| LVMH Mot Hennessy |
Samsung Electronics and LVMH Moët Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and LVMH Moët
The main advantage of trading using opposite Samsung Electronics and LVMH Moët positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, LVMH Moët 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 LVMH Moët will offset losses from the drop in LVMH Moët's long position.| Samsung Electronics vs. Guidewire Software | Samsung Electronics vs. PSI Software AG | Samsung Electronics vs. Take Two Interactive Software | Samsung Electronics vs. Constellation Software |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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