Correlation Between Samsung Electronics and Hannover Rück
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Hannover Rück 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 Hannover Rück 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 Hannover Rck SE, you can compare the effects of market volatilities on Samsung Electronics and Hannover Rück 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 Hannover Rück. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Hannover Rück.
Diversification Opportunities for Samsung Electronics and Hannover Rück
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Hannover is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Hannover Rck SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannover Rck SE 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 Hannover Rück. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannover Rck SE has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Hannover Rück go up and down completely randomly.
Pair Corralation between Samsung Electronics and Hannover Rück
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Hannover Rück. In addition to that, Samsung Electronics is 1.54 times more volatile than Hannover Rck SE. It trades about -0.02 of its total potential returns per unit of risk. Hannover Rck SE is currently generating about 0.06 per unit of volatility. If you would invest 19,102 in Hannover Rck SE on August 31, 2024 and sell it today you would earn a total of 5,468 from holding Hannover Rck SE or generate 28.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Hannover Rck SE
Performance |
| Timeline |
| Samsung Electronics |
| Hannover Rck SE |
Samsung Electronics and Hannover Rück Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Hannover Rück
The main advantage of trading using opposite Samsung Electronics and Hannover Rück positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Hannover Rück 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 Hannover Rück will offset losses from the drop in Hannover Rück's long position.| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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