Correlation Between Samsung SDI and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both Samsung SDI and Methode Electronics 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 SDI and Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung SDI Co and Methode Electronics, you can compare the effects of market volatilities on Samsung SDI and Methode Electronics 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 SDI with a short position of Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung SDI and Methode Electronics.
Diversification Opportunities for Samsung SDI and Methode Electronics
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samsung and Methode is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Samsung SDI Co and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and Samsung SDI 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 SDI Co are associated (or correlated) with Methode Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methode Electronics has no effect on the direction of Samsung SDI i.e., Samsung SDI and Methode Electronics go up and down completely randomly.
Pair Corralation between Samsung SDI and Methode Electronics
Assuming the 90 days trading horizon Samsung SDI Co is expected to generate 0.74 times more return on investment than Methode Electronics. However, Samsung SDI Co is 1.35 times less risky than Methode Electronics. It trades about -0.06 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.07 per unit of risk. If you would invest 12,648 in Samsung SDI Co on August 25, 2024 and sell it today you would lose (8,058) from holding Samsung SDI Co or give up 63.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung SDI Co vs. Methode Electronics
Performance |
| Timeline |
| Samsung SDI |
| Methode Electronics |
Samsung SDI and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung SDI and Methode Electronics
The main advantage of trading using opposite Samsung SDI and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung SDI position performs unexpectedly, Methode Electronics 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 Methode Electronics will offset losses from the drop in Methode Electronics' long position.| Samsung SDI vs. Amphenol | Samsung SDI vs. Hon Hai Precision | Samsung SDI vs. Corning Incorporated | Samsung SDI vs. Mitsubishi Electric |
| Methode Electronics vs. Amphenol | Methode Electronics vs. Hon Hai Precision | Methode Electronics vs. Samsung SDI Co | Methode Electronics vs. Corning Incorporated |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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