Correlation Between Samsung Electronics and Air Products
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Air Products 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 Air Products 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 Air Products Chemicals, you can compare the effects of market volatilities on Samsung Electronics and Air Products 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 Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Air Products.
Diversification Opportunities for Samsung Electronics and Air Products
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Air is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Air Products Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products Chemicals 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 Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products Chemicals has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Air Products go up and down completely randomly.
Pair Corralation between Samsung Electronics and Air Products
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Air Products. In addition to that, Samsung Electronics is 1.45 times more volatile than Air Products Chemicals. It trades about -0.17 of its total potential returns per unit of risk. Air Products Chemicals is currently generating about 0.17 per unit of volatility. If you would invest 27,118 in Air Products Chemicals on September 8, 2024 and sell it today you would earn a total of 5,158 from holding Air Products Chemicals or generate 19.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Samsung Electronics Co vs. Air Products Chemicals
Performance |
Timeline |
Samsung Electronics |
Air Products Chemicals |
Samsung Electronics and Air Products Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Samsung Electronics and Air Products
The main advantage of trading using opposite Samsung Electronics and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.Samsung Electronics vs. Invesco Physical Silver | Samsung Electronics vs. iShares Physical Silver | Samsung Electronics vs. Trainline Plc | Samsung Electronics vs. Blackrock World Mining |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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