Correlation Between Samsung Electronics and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Eagle Materials 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 Eagle Materials 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 Eagle Materials, you can compare the effects of market volatilities on Samsung Electronics and Eagle Materials 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 Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Eagle Materials.
Diversification Opportunities for Samsung Electronics and Eagle Materials
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Eagle is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials 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 Eagle Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Materials has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Eagle Materials go up and down completely randomly.
Pair Corralation between Samsung Electronics and Eagle Materials
Assuming the 90 days horizon Samsung Electronics Co is expected to under-perform the Eagle Materials. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.01 times less risky than Eagle Materials. The stock trades about -0.08 of its potential returns per unit of risk. The Eagle Materials is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 21,552 in Eagle Materials on August 25, 2024 and sell it today you would earn a total of 7,848 from holding Eagle Materials or generate 36.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Eagle Materials
Performance |
| Timeline |
| Samsung Electronics |
| Eagle Materials |
Samsung Electronics and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Eagle Materials
The main advantage of trading using opposite Samsung Electronics and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Eagle Materials 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 Eagle Materials will offset losses from the drop in Eagle Materials' long position.| Samsung Electronics vs. KINGBOARD CHEMICAL | Samsung Electronics vs. ScanSource | Samsung Electronics vs. GEAR4MUSIC LS 10 | Samsung Electronics vs. Eastman Chemical |
| Eagle Materials vs. Compagnie de Saint Gobain | Eagle Materials vs. HeidelbergCement AG | Eagle Materials vs. Superior Plus Corp | Eagle Materials vs. NMI Holdings |
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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