Correlation Between New Residential and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both New Residential 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 New Residential and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Residential Investment and Samsung Electronics Co, you can compare the effects of market volatilities on New Residential 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 New Residential with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Samsung Electronics.
Diversification Opportunities for New Residential and Samsung Electronics
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Samsung is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and New Residential 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 New Residential Investment 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 New Residential i.e., New Residential and Samsung Electronics go up and down completely randomly.
Pair Corralation between New Residential and Samsung Electronics
Assuming the 90 days trading horizon New Residential Investment is expected to generate 1.34 times more return on investment than Samsung Electronics. However, New Residential is 1.34 times more volatile than Samsung Electronics Co. It trades about 0.07 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.02 per unit of risk. If you would invest 673.00 in New Residential Investment on August 26, 2024 and sell it today you would earn a total of 417.00 from holding New Residential Investment or generate 61.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.75% |
| Values | Daily Returns |
New Residential Investment vs. Samsung Electronics Co
Performance |
| Timeline |
| New Residential Inve |
| Samsung Electronics |
New Residential and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Samsung Electronics
The main advantage of trading using opposite New Residential and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential 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.| New Residential vs. Samsung Electronics Co | New Residential vs. Samsung Electronics Co | New Residential vs. Hyundai Motor | New Residential vs. Toyota Motor Corp |
| Samsung Electronics vs. Toyota Motor Corp | Samsung Electronics vs. SoftBank Group Corp | Samsung Electronics vs. OTP Bank Nyrt | Samsung Electronics vs. Las Vegas Sands |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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