Correlation Between Samsung Electronics and EOG Resources
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and EOG Resources 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 EOG Resources 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 EOG Resources, you can compare the effects of market volatilities on Samsung Electronics and EOG Resources 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 EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and EOG Resources.
Diversification Opportunities for Samsung Electronics and EOG Resources
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and EOG is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources 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 EOG Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOG Resources has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and EOG Resources go up and down completely randomly.
Pair Corralation between Samsung Electronics and EOG Resources
Assuming the 90 days horizon Samsung Electronics Co is expected to under-perform the EOG Resources. In addition to that, Samsung Electronics is 1.25 times more volatile than EOG Resources. It trades about -0.15 of its total potential returns per unit of risk. EOG Resources is currently generating about 0.08 per unit of volatility. If you would invest 10,629 in EOG Resources on September 26, 2024 and sell it today you would earn a total of 865.00 from holding EOG Resources or generate 8.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Samsung Electronics Co vs. EOG Resources
Performance |
Timeline |
Samsung Electronics |
EOG Resources |
Samsung Electronics and EOG Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Samsung Electronics and EOG Resources
The main advantage of trading using opposite Samsung Electronics and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, EOG Resources 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 EOG Resources will offset losses from the drop in EOG Resources' long position.Samsung Electronics vs. Warner Music Group | Samsung Electronics vs. Ares Management Corp | Samsung Electronics vs. Algonquin Power Utilities | Samsung Electronics vs. Brockhaus Capital Management |
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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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