Correlation Between Samsung Electronics and American Tower
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and American Tower 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 American Tower 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 American Tower REIT, you can compare the effects of market volatilities on Samsung Electronics and American Tower 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 American Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and American Tower.
Diversification Opportunities for Samsung Electronics and American Tower
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and American is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and American Tower REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Tower REIT 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 American Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Tower REIT has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and American Tower go up and down completely randomly.
Pair Corralation between Samsung Electronics and American Tower
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the American Tower. In addition to that, Samsung Electronics is 1.85 times more volatile than American Tower REIT. It trades about -0.17 of its total potential returns per unit of risk. American Tower REIT is currently generating about -0.02 per unit of volatility. If you would invest 21,077 in American Tower REIT on September 5, 2024 and sell it today you would lose (229.00) from holding American Tower REIT or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. American Tower REIT
Performance |
| Timeline |
| Samsung Electronics |
| American Tower REIT |
Samsung Electronics and American Tower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and American Tower
The main advantage of trading using opposite Samsung Electronics and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, American Tower 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 American Tower will offset losses from the drop in American Tower's long position.| Samsung Electronics vs. Ashtead Technology Holdings | Samsung Electronics vs. Invesco Physical Silver | Samsung Electronics vs. Pfeiffer Vacuum Technology | Samsung Electronics vs. Caledonia Mining |
| American Tower vs. Samsung Electronics Co | American Tower vs. Samsung Electronics Co | American Tower vs. Hyundai Motor | American Tower vs. Toyota Motor Corp |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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