Correlation Between Samsung Electronics and Microchip Technology
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Microchip Technology 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 Microchip Technology 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 Microchip Technology, you can compare the effects of market volatilities on Samsung Electronics and Microchip Technology 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 Microchip Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Microchip Technology.
Diversification Opportunities for Samsung Electronics and Microchip Technology
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Microchip is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Microchip Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology 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 Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Microchip Technology go up and down completely randomly.
Pair Corralation between Samsung Electronics and Microchip Technology
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Microchip Technology. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.09 times less risky than Microchip Technology. The stock trades about -0.07 of its potential returns per unit of risk. The Microchip Technology is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 8,577 in Microchip Technology on August 29, 2024 and sell it today you would lose (1,773) from holding Microchip Technology or give up 20.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Microchip Technology
Performance |
| Timeline |
| Samsung Electronics |
| Microchip Technology |
Samsung Electronics and Microchip Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Microchip Technology
The main advantage of trading using opposite Samsung Electronics and Microchip Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Microchip Technology 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 Microchip Technology will offset losses from the drop in Microchip Technology's long position.| Samsung Electronics vs. Lundin Mining Corp | Samsung Electronics vs. Metals Exploration Plc | Samsung Electronics vs. Check Point Software | Samsung Electronics vs. GreenX Metals |
| Microchip Technology vs. Lendinvest PLC | Microchip Technology vs. Neometals | Microchip Technology vs. Coor Service Management | Microchip Technology 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |