Correlation Between Samsung Electronics and RF Materials
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and RF 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 RF 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 RF Materials Co, you can compare the effects of market volatilities on Samsung Electronics and RF 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 RF Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and RF Materials.
Diversification Opportunities for Samsung Electronics and RF Materials
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and 327260 is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and RF Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF 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 RF Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Materials has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and RF Materials go up and down completely randomly.
Pair Corralation between Samsung Electronics and RF Materials
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the RF Materials. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.38 times less risky than RF Materials. The stock trades about -0.43 of its potential returns per unit of risk. The RF Materials Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 707,000 in RF Materials Co on July 2, 2024 and sell it today you would lose (16,000) from holding RF Materials Co or give up 2.26% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Samsung Electronics Co vs. RF Materials Co
Performance |
Timeline |
Samsung Electronics |
RF Materials |
Samsung Electronics and RF Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Samsung Electronics and RF Materials
The main advantage of trading using opposite Samsung Electronics and RF Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, RF 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 RF Materials will offset losses from the drop in RF Materials' long position.Samsung Electronics vs. Youngbo Chemical Co | Samsung Electronics vs. Lotte Fine Chemical | Samsung Electronics vs. Koryo Credit Information | Samsung Electronics vs. Hanil Chemical Ind |
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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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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