Correlation Between Samsung Electronics and NICE Information
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and NICE Information 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 NICE Information 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 NICE Information Service, you can compare the effects of market volatilities on Samsung Electronics and NICE Information 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 NICE Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and NICE Information.
Diversification Opportunities for Samsung Electronics and NICE Information
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and NICE is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and NICE Information Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NICE Information Service 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 NICE Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NICE Information Service has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and NICE Information go up and down completely randomly.
Pair Corralation between Samsung Electronics and NICE Information
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the NICE Information. In addition to that, Samsung Electronics is 1.21 times more volatile than NICE Information Service. It trades about -0.07 of its total potential returns per unit of risk. NICE Information Service is currently generating about 0.18 per unit of volatility. If you would invest 1,105,000 in NICE Information Service on August 31, 2024 and sell it today you would earn a total of 101,000 from holding NICE Information Service or generate 9.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. NICE Information Service
Performance |
| Timeline |
| Samsung Electronics |
| NICE Information Service |
Samsung Electronics and NICE Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and NICE Information
The main advantage of trading using opposite Samsung Electronics and NICE Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, NICE Information 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 NICE Information will offset losses from the drop in NICE Information's long position.| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Busan Industrial Co | Samsung Electronics vs. Busan Ind | Samsung Electronics vs. Mirae Asset Daewoo |
| NICE Information vs. Korea New Network | NICE Information vs. ICD Co | NICE Information vs. DYPNF CoLtd | NICE Information vs. Busan Industrial Co |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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