Correlation Between Samsung Electronics and Heidelberg Materials
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Heidelberg 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 Heidelberg 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 Heidelberg Materials AG, you can compare the effects of market volatilities on Samsung Electronics and Heidelberg 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 Heidelberg Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Heidelberg Materials.
Diversification Opportunities for Samsung Electronics and Heidelberg Materials
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Heidelberg is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Heidelberg Materials AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg 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 Heidelberg Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heidelberg Materials has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Heidelberg Materials go up and down completely randomly.
Pair Corralation between Samsung Electronics and Heidelberg Materials
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Heidelberg Materials. In addition to that, Samsung Electronics is 1.23 times more volatile than Heidelberg Materials AG. It trades about -0.31 of its total potential returns per unit of risk. Heidelberg Materials AG is currently generating about 0.01 per unit of volatility. If you would invest 11,875 in Heidelberg Materials AG on September 23, 2024 and sell it today you would earn a total of 20.00 from holding Heidelberg Materials AG or generate 0.17% 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. Heidelberg Materials AG
Performance |
| Timeline |
| Samsung Electronics |
| Heidelberg Materials |
Samsung Electronics and Heidelberg Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Heidelberg Materials
The main advantage of trading using opposite Samsung Electronics and Heidelberg Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Heidelberg 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 Heidelberg Materials will offset losses from the drop in Heidelberg Materials' long position.| Samsung Electronics vs. Apple Inc | Samsung Electronics vs. Apple Inc | Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Sony Group Corp |
| Heidelberg Materials vs. Apple Inc | Heidelberg Materials vs. Apple Inc | Heidelberg Materials vs. Apple Inc | Heidelberg Materials vs. Apple Inc |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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