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
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ELECTRONIC and Samsung is -0.56. 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 0.67 times more return on investment than Samsung Electronics. However, ELECTRONIC ARTS is 1.49 times less risky than Samsung Electronics. It trades about 0.06 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 11,618 in ELECTRONIC ARTS on August 31, 2024 and sell it today you would earn a total of 3,802 from holding ELECTRONIC ARTS or generate 32.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| 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. SIVERS SEMICONDUCTORS AB | ELECTRONIC ARTS vs. Darden Restaurants | ELECTRONIC ARTS vs. Reliance Steel Aluminum | ELECTRONIC ARTS vs. Q2M Managementberatung AG |
| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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