Correlation Between CNH Industrial and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both CNH Industrial 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 CNH Industrial and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNH Industrial NV and Samsung Electronics Co, you can compare the effects of market volatilities on CNH Industrial 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 CNH Industrial with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Samsung Electronics.
Diversification Opportunities for CNH Industrial and Samsung Electronics
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CNH and Samsung is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and CNH Industrial 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 CNH Industrial NV 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 CNH Industrial i.e., CNH Industrial and Samsung Electronics go up and down completely randomly.
Pair Corralation between CNH Industrial and Samsung Electronics
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 1.67 times more return on investment than Samsung Electronics. However, CNH Industrial is 1.67 times more volatile than Samsung Electronics Co. It trades about 0.0 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.01 per unit of risk. If you would invest 1,435 in CNH Industrial NV on August 29, 2024 and sell it today you would lose (247.00) from holding CNH Industrial NV or give up 17.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.37% |
| Values | Daily Returns |
CNH Industrial NV vs. Samsung Electronics Co
Performance |
| Timeline |
| CNH Industrial NV |
| Samsung Electronics |
CNH Industrial and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Samsung Electronics
The main advantage of trading using opposite CNH Industrial and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial 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.| CNH Industrial vs. Lendinvest PLC | CNH Industrial vs. Neometals | CNH Industrial vs. Coor Service Management | CNH Industrial vs. Albion Technology General |
| Samsung Electronics vs. Ondine Biomedical | Samsung Electronics vs. Europa Metals | Samsung Electronics vs. Lendinvest PLC | Samsung Electronics vs. Neometals |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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