Correlation Between Samsung Electronics and Erste Group
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Erste Group 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 Erste Group 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 Erste Group Bank, you can compare the effects of market volatilities on Samsung Electronics and Erste Group 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 Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Erste Group.
Diversification Opportunities for Samsung Electronics and Erste Group
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Erste is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank 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 Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Erste Group go up and down completely randomly.
Pair Corralation between Samsung Electronics and Erste Group
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Erste Group. In addition to that, Samsung Electronics is 2.42 times more volatile than Erste Group Bank. It trades about -0.08 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.08 per unit of volatility. If you would invest 5,014 in Erste Group Bank on August 30, 2024 and sell it today you would earn a total of 109.00 from holding Erste Group Bank or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Erste Group Bank
Performance |
| Timeline |
| Samsung Electronics |
| Erste Group Bank |
Samsung Electronics and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Erste Group
The main advantage of trading using opposite Samsung Electronics and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Erste Group 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 Erste Group will offset losses from the drop in Erste Group's long position.| Samsung Electronics vs. GoldMining | Samsung Electronics vs. Fortune Brands Home | Samsung Electronics vs. Cairn Homes PLC | Samsung Electronics vs. iShares Physical Silver |
| Erste Group vs. Tungsten West PLC | Erste Group vs. Argo Group Limited | Erste Group vs. Hardide PLC | Erste Group vs. Versarien PLC |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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