Correlation Between Samsung Electronics and Caledonia Investments
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Caledonia Investments 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 Caledonia Investments 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 Caledonia Investments, you can compare the effects of market volatilities on Samsung Electronics and Caledonia Investments 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 Caledonia Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Caledonia Investments.
Diversification Opportunities for Samsung Electronics and Caledonia Investments
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Caledonia is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Caledonia Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Investments 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 Caledonia Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Investments has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Caledonia Investments go up and down completely randomly.
Pair Corralation between Samsung Electronics and Caledonia Investments
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Caledonia Investments. In addition to that, Samsung Electronics is 2.72 times more volatile than Caledonia Investments. It trades about -0.1 of its total potential returns per unit of risk. Caledonia Investments is currently generating about 0.08 per unit of volatility. If you would invest 338,980 in Caledonia Investments on October 9, 2024 and sell it today you would earn a total of 15,020 from holding Caledonia Investments or generate 4.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Samsung Electronics Co vs. Caledonia Investments
Performance |
Timeline |
Samsung Electronics |
Caledonia Investments |
Samsung Electronics and Caledonia Investments Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Samsung Electronics and Caledonia Investments
The main advantage of trading using opposite Samsung Electronics and Caledonia Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Caledonia Investments 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 Caledonia Investments will offset losses from the drop in Caledonia Investments' long position.Samsung Electronics vs. Learning Technologies Group | Samsung Electronics vs. Wyndham Hotels Resorts | Samsung Electronics vs. Polar Capital Technology | Samsung Electronics vs. Technicolor |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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