Correlation Between MERCK Kommanditgesells and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both MERCK Kommanditgesells 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 MERCK Kommanditgesells and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MERCK Kommanditgesellschaft auf and Samsung Electronics Co, you can compare the effects of market volatilities on MERCK Kommanditgesells 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 MERCK Kommanditgesells with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MERCK Kommanditgesells and Samsung Electronics.
Diversification Opportunities for MERCK Kommanditgesells and Samsung Electronics
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MERCK and Samsung is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding MERCK Kommanditgesellschaft au and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and MERCK Kommanditgesells 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 MERCK Kommanditgesellschaft auf 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 MERCK Kommanditgesells i.e., MERCK Kommanditgesells and Samsung Electronics go up and down completely randomly.
Pair Corralation between MERCK Kommanditgesells and Samsung Electronics
Assuming the 90 days trading horizon MERCK Kommanditgesellschaft auf is expected to generate 0.64 times more return on investment than Samsung Electronics. However, MERCK Kommanditgesellschaft auf is 1.57 times less risky than Samsung Electronics. It trades about -0.11 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.12 per unit of risk. If you would invest 15,677 in MERCK Kommanditgesellschaft auf on September 13, 2024 and sell it today you would lose (1,272) from holding MERCK Kommanditgesellschaft auf or give up 8.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
MERCK Kommanditgesellschaft au vs. Samsung Electronics Co
Performance |
| Timeline |
| MERCK Kommanditgesells |
| Samsung Electronics |
MERCK Kommanditgesells and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MERCK Kommanditgesells and Samsung Electronics
The main advantage of trading using opposite MERCK Kommanditgesells and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MERCK Kommanditgesells 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.| MERCK Kommanditgesells vs. Samsung Electronics Co | MERCK Kommanditgesells vs. Samsung Electronics Co | MERCK Kommanditgesells vs. Hyundai Motor | MERCK Kommanditgesells vs. Reliance Industries Ltd |
| Samsung Electronics vs. Fidelity National Information | Samsung Electronics vs. Edita Food Industries | Samsung Electronics vs. Axfood AB | Samsung Electronics vs. Air Products Chemicals |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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