Correlation Between Samsung Electronics and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and CNH Industrial 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 CNH Industrial 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 CNH Industrial NV, you can compare the effects of market volatilities on Samsung Electronics and CNH Industrial 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 CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and CNH Industrial.
Diversification Opportunities for Samsung Electronics and CNH Industrial
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and CNH is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV 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 CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and CNH Industrial go up and down completely randomly.
Pair Corralation between Samsung Electronics and CNH Industrial
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 4.35 times less return on investment than CNH Industrial. But when comparing it to its historical volatility, Samsung Electronics Co is 1.34 times less risky than CNH Industrial. It trades about 0.05 of its potential returns per unit of risk. CNH Industrial NV is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,053 in CNH Industrial NV on August 29, 2024 and sell it today you would earn a total of 145.00 from holding CNH Industrial NV or generate 13.77% 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. CNH Industrial NV
Performance |
| Timeline |
| Samsung Electronics |
| CNH Industrial NV |
Samsung Electronics and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and CNH Industrial
The main advantage of trading using opposite Samsung Electronics and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| Samsung Electronics vs. RELIANCE STEEL AL | Samsung Electronics vs. Daido Steel Co | Samsung Electronics vs. COSMOSTEEL HLDGS | Samsung Electronics vs. FAST RETAIL ADR |
| CNH Industrial vs. Superior Plus Corp | CNH Industrial vs. NMI Holdings | CNH Industrial vs. Origin Agritech | CNH Industrial vs. SIVERS SEMICONDUCTORS AB |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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