Correlation Between Erste Group and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Erste Group and Samsung Electronics 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 Erste Group and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erste Group Bank and Samsung Electronics Co, you can compare the effects of market volatilities on Erste Group and Samsung Electronics 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 Erste Group with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Samsung Electronics.
Diversification Opportunities for Erste Group and Samsung Electronics
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Erste and Samsung is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Erste Group 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 Erste Group Bank are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Erste Group i.e., Erste Group and Samsung Electronics go up and down completely randomly.
Pair Corralation between Erste Group and Samsung Electronics
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.5 times more return on investment than Samsung Electronics. However, Erste Group Bank is 1.99 times less risky than Samsung Electronics. It trades about 0.23 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.15 per unit of risk. If you would invest 4,694 in Erste Group Bank on September 11, 2024 and sell it today you would earn a total of 774.00 from holding Erste Group Bank or generate 16.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Erste Group Bank vs. Samsung Electronics Co
Performance |
Timeline |
Erste Group Bank |
Samsung Electronics |
Erste Group and Samsung Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Erste Group and Samsung Electronics
The main advantage of trading using opposite Erste Group and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Samsung Electronics 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.Erste Group vs. Omega Healthcare Investors | Erste Group vs. Target Healthcare REIT | Erste Group vs. Check Point Software | Erste Group vs. Virgin Wines UK |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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