Correlation Between Samsung Electronics and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Summit Materials 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 Summit Materials 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 Summit Materials, you can compare the effects of market volatilities on Samsung Electronics and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Summit Materials.
Diversification Opportunities for Samsung Electronics and Summit Materials
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Summit is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Summit Materials go up and down completely randomly.
Pair Corralation between Samsung Electronics and Summit Materials
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Summit Materials. In addition to that, Samsung Electronics is 1.03 times more volatile than Summit Materials. It trades about -0.11 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.13 per unit of volatility. If you would invest 3,380 in Summit Materials on September 25, 2024 and sell it today you would earn a total of 1,480 from holding Summit Materials or generate 43.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Samsung Electronics Co vs. Summit Materials
Performance |
Timeline |
Samsung Electronics |
Summit Materials |
Samsung Electronics and Summit Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Samsung Electronics and Summit Materials
The main advantage of trading using opposite Samsung Electronics and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.Samsung Electronics vs. Apple Inc | Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Sony Group | Samsung Electronics vs. Xiaomi |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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