Correlation Between NVIDIA and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both NVIDIA 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 NVIDIA and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Samsung Electronics Co, you can compare the effects of market volatilities on NVIDIA 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 NVIDIA with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Samsung Electronics.
Diversification Opportunities for NVIDIA and Samsung Electronics
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NVIDIA and Samsung is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and NVIDIA 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 NVIDIA 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 NVIDIA i.e., NVIDIA and Samsung Electronics go up and down completely randomly.
Pair Corralation between NVIDIA and Samsung Electronics
Given the investment horizon of 90 days NVIDIA is expected to generate 23.15 times more return on investment than Samsung Electronics. However, NVIDIA is 23.15 times more volatile than Samsung Electronics Co. It trades about 0.15 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.15 per unit of risk. If you would invest 12,351 in NVIDIA on August 26, 2024 and sell it today you would earn a total of 1,844 from holding NVIDIA or generate 14.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Samsung Electronics Co
Performance |
| Timeline |
| NVIDIA |
| Samsung Electronics |
NVIDIA and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Samsung Electronics
The main advantage of trading using opposite NVIDIA and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA 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.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Samsung Electronics vs. Copa Holdings SA | Samsung Electronics vs. United Airlines Holdings | Samsung Electronics vs. Delta Air Lines | Samsung Electronics vs. SkyWest |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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