Correlation Between Fortescue Metals and Samsung SDI
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals and Samsung SDI 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 Fortescue Metals and Samsung SDI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortescue Metals Group and Samsung SDI Co, you can compare the effects of market volatilities on Fortescue Metals and Samsung SDI 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 Fortescue Metals with a short position of Samsung SDI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and Samsung SDI.
Diversification Opportunities for Fortescue Metals and Samsung SDI
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fortescue and Samsung is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and Samsung SDI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI and Fortescue Metals 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 Fortescue Metals Group are associated (or correlated) with Samsung SDI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung SDI has no effect on the direction of Fortescue Metals i.e., Fortescue Metals and Samsung SDI go up and down completely randomly.
Pair Corralation between Fortescue Metals and Samsung SDI
Assuming the 90 days horizon Fortescue Metals Group is expected to generate 0.58 times more return on investment than Samsung SDI. However, Fortescue Metals Group is 1.72 times less risky than Samsung SDI. It trades about 0.19 of its potential returns per unit of risk. Samsung SDI Co is currently generating about -0.12 per unit of risk. If you would invest 1,102 in Fortescue Metals Group on October 23, 2024 and sell it today you would earn a total of 58.00 from holding Fortescue Metals Group or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Fortescue Metals Group vs. Samsung SDI Co
Performance |
| Timeline |
| Fortescue Metals |
| Samsung SDI |
Fortescue Metals and Samsung SDI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and Samsung SDI
The main advantage of trading using opposite Fortescue Metals and Samsung SDI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals position performs unexpectedly, Samsung SDI 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 SDI will offset losses from the drop in Samsung SDI's long position.| Fortescue Metals vs. Casio Computer CoLtd | Fortescue Metals vs. China Communications Services | Fortescue Metals vs. Tradeweb Markets | Fortescue Metals vs. H2O Retailing |
| Samsung SDI vs. Highlight Communications AG | Samsung SDI vs. CITIC Telecom International | Samsung SDI vs. China Communications Services | Samsung SDI vs. ecotel communication ag |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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