Correlation Between American Homes and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both American Homes 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 American Homes and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Homes 4 and Samsung Electronics Co, you can compare the effects of market volatilities on American Homes 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 American Homes with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and Samsung Electronics.
Diversification Opportunities for American Homes and Samsung Electronics
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Samsung is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and American Homes 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 American Homes 4 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 American Homes i.e., American Homes and Samsung Electronics go up and down completely randomly.
Pair Corralation between American Homes and Samsung Electronics
Assuming the 90 days trading horizon American Homes 4 is expected to generate 0.93 times more return on investment than Samsung Electronics. However, American Homes 4 is 1.08 times less risky than Samsung Electronics. It trades about 0.03 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.03 per unit of risk. If you would invest 3,103 in American Homes 4 on September 1, 2024 and sell it today you would earn a total of 517.00 from holding American Homes 4 or generate 16.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Homes 4 vs. Samsung Electronics Co
Performance |
| Timeline |
| American Homes 4 |
| Samsung Electronics |
American Homes and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and Samsung Electronics
The main advantage of trading using opposite American Homes and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes 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.| American Homes vs. UDR Inc | American Homes vs. INVITATION HOMES DL | American Homes vs. Superior Plus Corp | American Homes vs. Origin Agritech |
| Samsung Electronics vs. VIVA WINE GROUP | Samsung Electronics vs. Haverty Furniture Companies | Samsung Electronics vs. American Homes 4 | Samsung Electronics vs. Marie Brizard Wine |
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 CEOs Directory module to screen CEOs from public companies around the world.
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