Correlation Between NCC Group and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both NCC Group 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 NCC Group and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NCC Group plc and Samsung Electronics Co, you can compare the effects of market volatilities on NCC Group 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 NCC Group with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NCC Group and Samsung Electronics.
Diversification Opportunities for NCC Group and Samsung Electronics
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NCC and Samsung is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NCC Group plc and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and NCC Group 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 NCC Group plc 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 NCC Group i.e., NCC Group and Samsung Electronics go up and down completely randomly.
Pair Corralation between NCC Group and Samsung Electronics
Assuming the 90 days trading horizon NCC Group plc is expected to generate 1.2 times more return on investment than Samsung Electronics. However, NCC Group is 1.2 times more volatile than Samsung Electronics Co. It trades about 0.06 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.07 per unit of risk. If you would invest 10,928 in NCC Group plc on September 23, 2024 and sell it today you would earn a total of 3,772 from holding NCC Group plc or generate 34.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NCC Group plc vs. Samsung Electronics Co
Performance |
| Timeline |
| NCC Group plc |
| Samsung Electronics |
NCC Group and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NCC Group and Samsung Electronics
The main advantage of trading using opposite NCC Group and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NCC Group 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.| NCC Group vs. Samsung Electronics Co | NCC Group vs. Samsung Electronics Co | NCC Group vs. Hyundai Motor | NCC Group vs. Toyota Motor Corp |
| Samsung Electronics vs. Rockfire Resources plc | Samsung Electronics vs. Tlou Energy | Samsung Electronics vs. Ikigai Ventures | Samsung Electronics vs. Falcon Oil Gas |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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