Correlation Between Samsung Electronics and Boeing
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Boeing 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 Boeing 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 The Boeing, you can compare the effects of market volatilities on Samsung Electronics and Boeing 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 Boeing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Boeing.
Diversification Opportunities for Samsung Electronics and Boeing
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samsung and Boeing is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing 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 Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Boeing go up and down completely randomly.
Pair Corralation between Samsung Electronics and Boeing
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Boeing. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.01 times less risky than Boeing. The stock trades about -0.19 of its potential returns per unit of risk. The The Boeing is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 339,500 in The Boeing on September 2, 2024 and sell it today you would lose (21,500) from holding The Boeing or give up 6.33% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.41% |
Values | Daily Returns |
Samsung Electronics Co vs. The Boeing
Performance |
Timeline |
Samsung Electronics |
Boeing |
Samsung Electronics and Boeing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Samsung Electronics and Boeing
The main advantage of trading using opposite Samsung Electronics and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Boeing 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 Boeing will offset losses from the drop in Boeing's long position.Samsung Electronics vs. Apple Inc | Samsung Electronics vs. Netflix | Samsung Electronics vs. Monster Beverage Corp |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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