Correlation Between Samsung Electronics and Kinder Morgan
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Kinder Morgan 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 Kinder Morgan 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 Kinder Morgan, you can compare the effects of market volatilities on Samsung Electronics and Kinder Morgan 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 Kinder Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Kinder Morgan.
Diversification Opportunities for Samsung Electronics and Kinder Morgan
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Kinder is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Kinder Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinder Morgan 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 Kinder Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinder Morgan has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Kinder Morgan go up and down completely randomly.
Pair Corralation between Samsung Electronics and Kinder Morgan
Assuming the 90 days horizon Samsung Electronics Co is expected to under-perform the Kinder Morgan. In addition to that, Samsung Electronics is 1.59 times more volatile than Kinder Morgan. It trades about -0.16 of its total potential returns per unit of risk. Kinder Morgan is currently generating about -0.22 per unit of volatility. If you would invest 2,742 in Kinder Morgan on September 23, 2024 and sell it today you would lose (164.00) from holding Kinder Morgan or give up 5.98% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Samsung Electronics Co vs. Kinder Morgan
Performance |
Timeline |
Samsung Electronics |
Kinder Morgan |
Samsung Electronics and Kinder Morgan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Samsung Electronics and Kinder Morgan
The main advantage of trading using opposite Samsung Electronics and Kinder Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Kinder Morgan 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 Kinder Morgan will offset losses from the drop in Kinder Morgan's long position.Samsung Electronics vs. Computershare Limited | Samsung Electronics vs. AXWAY SOFTWARE EO | Samsung Electronics vs. United Internet AG | Samsung Electronics vs. Singapore Telecommunications Limited |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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