Correlation Between Samsung Electronics and Metro AG
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Metro AG 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 Metro AG 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 Metro AG, you can compare the effects of market volatilities on Samsung Electronics and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Metro AG.
Diversification Opportunities for Samsung Electronics and Metro AG
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Metro is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Metro AG go up and down completely randomly.
Pair Corralation between Samsung Electronics and Metro AG
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Metro AG. In addition to that, Samsung Electronics is 1.18 times more volatile than Metro AG. It trades about -0.07 of its total potential returns per unit of risk. Metro AG is currently generating about -0.05 per unit of volatility. If you would invest 522.00 in Metro AG on September 1, 2024 and sell it today you would lose (83.00) from holding Metro AG or give up 15.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.48% |
| Values | Daily Returns |
Samsung Electronics Co vs. Metro AG
Performance |
| Timeline |
| Samsung Electronics |
| Metro AG |
Samsung Electronics and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Metro AG
The main advantage of trading using opposite Samsung Electronics and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| Samsung Electronics vs. Chiba Bank | Samsung Electronics vs. VULCAN MATERIALS | Samsung Electronics vs. Compagnie Plastic Omnium | Samsung Electronics vs. Rayonier Advanced Materials |
| Metro AG vs. HANOVER INSURANCE | Metro AG vs. Safety Insurance Group | Metro AG vs. LIFENET INSURANCE CO | Metro AG vs. Zurich Insurance Group |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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