Correlation Between NOW and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both NOW 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 NOW and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOW Inc and Samsung Electronics Co, you can compare the effects of market volatilities on NOW 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 NOW with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOW and Samsung Electronics.
Diversification Opportunities for NOW and Samsung Electronics
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NOW and Samsung is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding NOW Inc and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and NOW 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 NOW Inc 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 NOW i.e., NOW and Samsung Electronics go up and down completely randomly.
Pair Corralation between NOW and Samsung Electronics
Assuming the 90 days trading horizon NOW Inc is expected to generate 1.04 times more return on investment than Samsung Electronics. However, NOW is 1.04 times more volatile than Samsung Electronics Co. It trades about 0.17 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.12 per unit of risk. If you would invest 1,187 in NOW Inc on September 12, 2024 and sell it today you would earn a total of 313.00 from holding NOW Inc or generate 26.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NOW Inc vs. Samsung Electronics Co
Performance |
| Timeline |
| NOW Inc |
| Samsung Electronics |
NOW and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NOW and Samsung Electronics
The main advantage of trading using opposite NOW and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOW 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.| NOW vs. Jupiter Fund Management | NOW vs. Air Products Chemicals | NOW vs. Cairn Homes PLC | NOW vs. CAP LEASE AVIATION |
| Samsung Electronics vs. MyHealthChecked Plc | Samsung Electronics vs. HCA Healthcare | Samsung Electronics vs. Worldwide Healthcare Trust | Samsung Electronics vs. Norwegian Air Shuttle |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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