Correlation Between Samsung Electronics and Panasonic Corp
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Panasonic Corp 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 Panasonic Corp 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 Panasonic Corp, you can compare the effects of market volatilities on Samsung Electronics and Panasonic Corp 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 Panasonic Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Panasonic Corp.
Diversification Opportunities for Samsung Electronics and Panasonic Corp
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Panasonic is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Panasonic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panasonic Corp 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 Panasonic Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panasonic Corp has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Panasonic Corp go up and down completely randomly.
Pair Corralation between Samsung Electronics and Panasonic Corp
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 11.31 times less return on investment than Panasonic Corp. In addition to that, Samsung Electronics is 1.16 times more volatile than Panasonic Corp. It trades about 0.02 of its total potential returns per unit of risk. Panasonic Corp is currently generating about 0.24 per unit of volatility. If you would invest 805.00 in Panasonic Corp on September 7, 2024 and sell it today you would earn a total of 115.00 from holding Panasonic Corp or generate 14.29% 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. Panasonic Corp
Performance |
Timeline |
Samsung Electronics |
Panasonic Corp |
Samsung Electronics and Panasonic Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Samsung Electronics and Panasonic Corp
The main advantage of trading using opposite Samsung Electronics and Panasonic Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Panasonic Corp 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 Panasonic Corp will offset losses from the drop in Panasonic Corp's long position.Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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