Correlation Between VeriSign and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both VeriSign 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 VeriSign and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VeriSign and Samsung Electronics Co, you can compare the effects of market volatilities on VeriSign 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 VeriSign with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of VeriSign and Samsung Electronics.
Diversification Opportunities for VeriSign and Samsung Electronics
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VeriSign and Samsung is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding VeriSign and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and VeriSign 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 VeriSign 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 VeriSign i.e., VeriSign and Samsung Electronics go up and down completely randomly.
Pair Corralation between VeriSign and Samsung Electronics
Assuming the 90 days trading horizon VeriSign is expected to generate 0.61 times more return on investment than Samsung Electronics. However, VeriSign is 1.65 times less risky than Samsung Electronics. It trades about 0.22 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.03 per unit of risk. If you would invest 18,451 in VeriSign on September 13, 2024 and sell it today you would earn a total of 1,579 from holding VeriSign or generate 8.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
VeriSign vs. Samsung Electronics Co
Performance |
| Timeline |
| VeriSign |
| Samsung Electronics |
VeriSign and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VeriSign and Samsung Electronics
The main advantage of trading using opposite VeriSign and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VeriSign 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.| VeriSign vs. Samsung Electronics Co | VeriSign vs. Samsung Electronics Co | VeriSign vs. Hyundai Motor | VeriSign vs. Reliance Industries Ltd |
| Samsung Electronics vs. Fidelity National Information | Samsung Electronics vs. Edita Food Industries | Samsung Electronics vs. Axfood AB | Samsung Electronics vs. Air Products Chemicals |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |