Correlation Between Samsung Electronics and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Norwegian Air 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 Samsung Electronics and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Norwegian Air Shuttle, you can compare the effects of market volatilities on Samsung Electronics and Norwegian Air 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 Samsung Electronics with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Norwegian Air.
Diversification Opportunities for Samsung Electronics and Norwegian Air
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Samsung and Norwegian is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Norwegian Air Shuttle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Air Shuttle and Samsung Electronics 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 Samsung Electronics Co are associated (or correlated) with Norwegian Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Air Shuttle has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Norwegian Air go up and down completely randomly.
Pair Corralation between Samsung Electronics and Norwegian Air
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.67 times more return on investment than Norwegian Air. However, Samsung Electronics Co is 1.49 times less risky than Norwegian Air. It trades about -0.1 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about -0.07 per unit of risk. If you would invest 98,300 in Samsung Electronics Co on August 29, 2024 and sell it today you would lose (10,100) from holding Samsung Electronics Co or give up 10.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Samsung Electronics |
| Norwegian Air Shuttle |
Samsung Electronics and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Norwegian Air
The main advantage of trading using opposite Samsung Electronics and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Norwegian Air 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 Norwegian Air will offset losses from the drop in Norwegian Air's long position.| Samsung Electronics vs. Ondine Biomedical | Samsung Electronics vs. Europa Metals | Samsung Electronics vs. Lendinvest PLC | Samsung Electronics vs. Neometals |
| Norwegian Air vs. Lendinvest PLC | Norwegian Air vs. Neometals | Norwegian Air vs. Coor Service Management | Norwegian Air vs. Albion Technology General |
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 CEOs Directory module to screen CEOs from public companies around the world.
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