Correlation Between Samsung Electronics and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Hitachi Construction 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 Hitachi Construction 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 Hitachi Construction Machinery, you can compare the effects of market volatilities on Samsung Electronics and Hitachi Construction 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 Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Hitachi Construction.
Diversification Opportunities for Samsung Electronics and Hitachi Construction
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Hitachi is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction 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 Hitachi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Construction has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Hitachi Construction go up and down completely randomly.
Pair Corralation between Samsung Electronics and Hitachi Construction
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Hitachi Construction. In addition to that, Samsung Electronics is 1.26 times more volatile than Hitachi Construction Machinery. It trades about -0.11 of its total potential returns per unit of risk. Hitachi Construction Machinery is currently generating about 0.09 per unit of volatility. If you would invest 1,920 in Hitachi Construction Machinery on November 3, 2024 and sell it today you would earn a total of 380.00 from holding Hitachi Construction Machinery or generate 19.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Hitachi Construction Machinery
Performance |
| Timeline |
| Samsung Electronics |
| Hitachi Construction |
Samsung Electronics and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Hitachi Construction
The main advantage of trading using opposite Samsung Electronics and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Hitachi Construction 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 Hitachi Construction will offset losses from the drop in Hitachi Construction's long position.| Samsung Electronics vs. Apple Inc | Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Sony Group Corp | Samsung Electronics vs. Sony Group |
| Hitachi Construction vs. Zijin Mining Group | Hitachi Construction vs. WisdomTree Investments | Hitachi Construction vs. MAGNUM MINING EXP | Hitachi Construction vs. Perseus Mining Limited |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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