Correlation Between NORTHEAST UTILITIES and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES 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 NORTHEAST UTILITIES and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and Samsung Electronics Co, you can compare the effects of market volatilities on NORTHEAST UTILITIES 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 NORTHEAST UTILITIES with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and Samsung Electronics.
Diversification Opportunities for NORTHEAST UTILITIES and Samsung Electronics
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NORTHEAST and Samsung is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES 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 NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and Samsung Electronics go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and Samsung Electronics
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to generate 0.6 times more return on investment than Samsung Electronics. However, NORTHEAST UTILITIES is 1.68 times less risky than Samsung Electronics. It trades about -0.05 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 5,775 in NORTHEAST UTILITIES on October 14, 2024 and sell it today you would lose (275.00) from holding NORTHEAST UTILITIES or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORTHEAST UTILITIES vs. Samsung Electronics Co
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| Samsung Electronics |
NORTHEAST UTILITIES and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and Samsung Electronics
The main advantage of trading using opposite NORTHEAST UTILITIES and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES 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.| NORTHEAST UTILITIES vs. CHINA TONTINE WINES | NORTHEAST UTILITIES vs. ScanSource | NORTHEAST UTILITIES vs. Taylor Morrison Home | NORTHEAST UTILITIES vs. Marie Brizard Wine |
| Samsung Electronics vs. EIDESVIK OFFSHORE NK | Samsung Electronics vs. SOLSTAD OFFSHORE NK | Samsung Electronics vs. NORTHEAST UTILITIES | Samsung Electronics vs. United Utilities 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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