Correlation Between Samsung Electronics and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Rheinmetall 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 Rheinmetall 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 Rheinmetall AG, you can compare the effects of market volatilities on Samsung Electronics and Rheinmetall 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 Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Rheinmetall.
Diversification Opportunities for Samsung Electronics and Rheinmetall
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and Rheinmetall is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG 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 Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Rheinmetall go up and down completely randomly.
Pair Corralation between Samsung Electronics and Rheinmetall
Assuming the 90 days horizon Samsung Electronics Co is expected to under-perform the Rheinmetall. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.04 times less risky than Rheinmetall. The stock trades about 0.0 of its potential returns per unit of risk. The Rheinmetall AG is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 19,384 in Rheinmetall AG on September 3, 2024 and sell it today you would earn a total of 42,936 from holding Rheinmetall AG or generate 221.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Rheinmetall AG
Performance |
| Timeline |
| Samsung Electronics |
| Rheinmetall AG |
Samsung Electronics and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Rheinmetall
The main advantage of trading using opposite Samsung Electronics and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.| Samsung Electronics vs. ARISTOCRAT LEISURE | Samsung Electronics vs. Universal Display | Samsung Electronics vs. PLAYTIKA HOLDING DL 01 | Samsung Electronics vs. TRAVEL LEISURE DL 01 |
| Rheinmetall vs. VIVA WINE GROUP | Rheinmetall vs. Compugroup Medical SE | Rheinmetall vs. Apollo Medical Holdings | Rheinmetall vs. VIRGIN WINES UK |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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