Correlation Between Samsung Electronics and SSE PLC
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and SSE PLC 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 SSE PLC 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 SSE PLC ADR, you can compare the effects of market volatilities on Samsung Electronics and SSE PLC 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 SSE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and SSE PLC.
Diversification Opportunities for Samsung Electronics and SSE PLC
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and SSE is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and SSE PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSE PLC ADR 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 SSE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSE PLC ADR has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and SSE PLC go up and down completely randomly.
Pair Corralation between Samsung Electronics and SSE PLC
Assuming the 90 days horizon Samsung Electronics Co is expected to under-perform the SSE PLC. In addition to that, Samsung Electronics is 1.38 times more volatile than SSE PLC ADR. It trades about -0.01 of its total potential returns per unit of risk. SSE PLC ADR is currently generating about 0.02 per unit of volatility. If you would invest 1,727 in SSE PLC ADR on October 4, 2024 and sell it today you would earn a total of 183.00 from holding SSE PLC ADR or generate 10.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Samsung Electronics Co vs. SSE PLC ADR
Performance |
Timeline |
Samsung Electronics |
SSE PLC ADR |
Samsung Electronics and SSE PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Samsung Electronics and SSE PLC
The main advantage of trading using opposite Samsung Electronics and SSE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, SSE PLC 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 SSE PLC will offset losses from the drop in SSE PLC's long position.Samsung Electronics vs. Renesas Electronics | Samsung Electronics vs. Electronic Arts | Samsung Electronics vs. Methode Electronics | Samsung Electronics vs. FAST RETAIL ADR |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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