Correlation Between ELECTRONIC ARTS and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both ELECTRONIC ARTS 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 ELECTRONIC ARTS and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTRONIC ARTS and Samsung Electronics Co, you can compare the effects of market volatilities on ELECTRONIC ARTS 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 ELECTRONIC ARTS with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTRONIC ARTS and Samsung Electronics.
Diversification Opportunities for ELECTRONIC ARTS and Samsung Electronics
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ELECTRONIC and Samsung is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding ELECTRONIC ARTS and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and ELECTRONIC ARTS 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 ELECTRONIC ARTS 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 ELECTRONIC ARTS i.e., ELECTRONIC ARTS and Samsung Electronics go up and down completely randomly.
Pair Corralation between ELECTRONIC ARTS and Samsung Electronics
Assuming the 90 days trading horizon ELECTRONIC ARTS is expected to generate 0.62 times more return on investment than Samsung Electronics. However, ELECTRONIC ARTS is 1.62 times less risky than Samsung Electronics. It trades about 0.07 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.06 per unit of risk. If you would invest 12,633 in ELECTRONIC ARTS on September 12, 2024 and sell it today you would earn a total of 2,999 from holding ELECTRONIC ARTS or generate 23.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELECTRONIC ARTS vs. Samsung Electronics Co
Performance |
| Timeline |
| ELECTRONIC ARTS |
| Samsung Electronics |
ELECTRONIC ARTS and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECTRONIC ARTS and Samsung Electronics
The main advantage of trading using opposite ELECTRONIC ARTS and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTRONIC ARTS 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.| ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc |
| Samsung Electronics vs. Methode Electronics | Samsung Electronics vs. Charter Communications | Samsung Electronics vs. Meiko Electronics Co | Samsung Electronics vs. ELECTRONIC ARTS |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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