Correlation Between Samsung Electronics and Digital Realty
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Digital Realty 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 Digital Realty 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 Digital Realty Trust, you can compare the effects of market volatilities on Samsung Electronics and Digital Realty 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 Digital Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Digital Realty.
Diversification Opportunities for Samsung Electronics and Digital Realty
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Digital is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Digital Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Realty Trust 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 Digital Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Realty Trust has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Digital Realty go up and down completely randomly.
Pair Corralation between Samsung Electronics and Digital Realty
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Digital Realty. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.13 times less risky than Digital Realty. The stock trades about -0.01 of its potential returns per unit of risk. The Digital Realty Trust is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 10,036 in Digital Realty Trust on August 30, 2024 and sell it today you would earn a total of 9,474 from holding Digital Realty Trust or generate 94.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.99% |
| Values | Daily Returns |
Samsung Electronics Co vs. Digital Realty Trust
Performance |
| Timeline |
| Samsung Electronics |
| Digital Realty Trust |
Samsung Electronics and Digital Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Digital Realty
The main advantage of trading using opposite Samsung Electronics and Digital Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Digital Realty 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 Digital Realty will offset losses from the drop in Digital Realty's long position.| Samsung Electronics vs. Ondine Biomedical | Samsung Electronics vs. Europa Metals | Samsung Electronics vs. Lendinvest PLC | Samsung Electronics vs. Neometals |
| Digital Realty vs. Lendinvest PLC | Digital Realty vs. Neometals | Digital Realty vs. Albion Technology General | Digital Realty vs. Jupiter Fund Management |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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