Correlation Between AES Corp and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both AES Corp and Samsung Electronics 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 AES Corp and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AES Corp and Samsung Electronics Co, you can compare the effects of market volatilities on AES Corp and Samsung Electronics 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 AES Corp with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES Corp and Samsung Electronics.
Diversification Opportunities for AES Corp and Samsung Electronics
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AES and Samsung is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding AES Corp and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and AES Corp 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 AES Corp are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of AES Corp i.e., AES Corp and Samsung Electronics go up and down completely randomly.
Pair Corralation between AES Corp and Samsung Electronics
Assuming the 90 days trading horizon AES Corp is expected to under-perform the Samsung Electronics. In addition to that, AES Corp is 1.3 times more volatile than Samsung Electronics Co. It trades about -0.05 of its total potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.02 per unit of volatility. If you would invest 94,575 in Samsung Electronics Co on September 24, 2024 and sell it today you would lose (19,575) from holding Samsung Electronics Co or give up 20.7% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 98.6% |
Values | Daily Returns |
AES Corp vs. Samsung Electronics Co
Performance |
Timeline |
AES Corp |
Samsung Electronics |
AES Corp and Samsung Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AES Corp and Samsung Electronics
The main advantage of trading using opposite AES Corp and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AES Corp position performs unexpectedly, Samsung Electronics 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.AES Corp vs. Uniper SE | AES Corp vs. Mulberry Group PLC | AES Corp vs. London Security Plc | AES Corp vs. Triad Group PLC |
Samsung Electronics vs. Rockfire Resources plc | Samsung Electronics vs. Tlou Energy | Samsung Electronics vs. Ikigai Ventures | Samsung Electronics vs. Falcon Oil Gas |
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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