Correlation Between Nippon Active and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Nippon Active 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 Nippon Active and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nippon Active Value and Samsung Electronics Co, you can compare the effects of market volatilities on Nippon Active 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 Nippon Active with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Active and Samsung Electronics.
Diversification Opportunities for Nippon Active and Samsung Electronics
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nippon and Samsung is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Active Value and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Nippon Active 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 Nippon Active Value 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 Nippon Active i.e., Nippon Active and Samsung Electronics go up and down completely randomly.
Pair Corralation between Nippon Active and Samsung Electronics
Assuming the 90 days trading horizon Nippon Active Value is expected to generate 0.52 times more return on investment than Samsung Electronics. However, Nippon Active Value is 1.91 times less risky than Samsung Electronics. It trades about 0.15 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.35 per unit of risk. If you would invest 18,300 in Nippon Active Value on September 22, 2024 and sell it today you would earn a total of 600.00 from holding Nippon Active Value or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nippon Active Value vs. Samsung Electronics Co
Performance |
| Timeline |
| Nippon Active Value |
| Samsung Electronics |
Nippon Active and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nippon Active and Samsung Electronics
The main advantage of trading using opposite Nippon Active and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Active 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.| Nippon Active vs. Samsung Electronics Co | Nippon Active vs. Samsung Electronics Co | Nippon Active vs. Hyundai Motor | Nippon Active vs. Toyota Motor Corp |
| Samsung Electronics vs. Spirent Communications plc | Samsung Electronics vs. Games Workshop Group | Samsung Electronics vs. Gamma Communications PLC | Samsung Electronics vs. Evolution Gaming Group |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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