Correlation Between Samsung Electronics and Yum Brands
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Yum Brands 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 Yum Brands 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 Yum Brands, you can compare the effects of market volatilities on Samsung Electronics and Yum Brands 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 Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Yum Brands.
Diversification Opportunities for Samsung Electronics and Yum Brands
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and Yum is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands 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 Yum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yum Brands has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Yum Brands go up and down completely randomly.
Pair Corralation between Samsung Electronics and Yum Brands
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Yum Brands. In addition to that, Samsung Electronics is 2.0 times more volatile than Yum Brands. It trades about -0.15 of its total potential returns per unit of risk. Yum Brands is currently generating about 0.06 per unit of volatility. If you would invest 13,289 in Yum Brands on September 12, 2024 and sell it today you would earn a total of 571.00 from holding Yum Brands or generate 4.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.46% |
Values | Daily Returns |
Samsung Electronics Co vs. Yum Brands
Performance |
Timeline |
Samsung Electronics |
Yum Brands |
Samsung Electronics and Yum Brands Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Samsung Electronics and Yum Brands
The main advantage of trading using opposite Samsung Electronics and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Yum Brands 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 Yum Brands will offset losses from the drop in Yum Brands' long position.Samsung Electronics vs. McEwen Mining | Samsung Electronics vs. United Utilities Group | Samsung Electronics vs. Coor Service Management | Samsung Electronics vs. Jupiter Fund Management |
Yum Brands vs. Panther Metals PLC | Yum Brands vs. Air Products Chemicals | Yum Brands vs. Adriatic Metals | Yum Brands vs. Fulcrum Metals PLC |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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