Correlation Between Samsung Electronics and NetApp
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and NetApp 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 NetApp 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 NetApp Inc, you can compare the effects of market volatilities on Samsung Electronics and NetApp 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 NetApp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and NetApp.
Diversification Opportunities for Samsung Electronics and NetApp
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Samsung and NetApp is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and NetApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetApp Inc 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 NetApp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetApp Inc has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and NetApp go up and down completely randomly.
Pair Corralation between Samsung Electronics and NetApp
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the NetApp. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.08 times less risky than NetApp. The stock trades about -0.05 of its potential returns per unit of risk. The NetApp Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,093 in NetApp Inc on September 12, 2024 and sell it today you would earn a total of 5,708 from holding NetApp Inc or generate 80.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.35% |
| Values | Daily Returns |
Samsung Electronics Co vs. NetApp Inc
Performance |
| Timeline |
| Samsung Electronics |
| NetApp Inc |
Samsung Electronics and NetApp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and NetApp
The main advantage of trading using opposite Samsung Electronics and NetApp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, NetApp 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 NetApp will offset losses from the drop in NetApp's long position.| Samsung Electronics vs. McEwen Mining | Samsung Electronics vs. United Utilities Group | Samsung Electronics vs. Coor Service Management | Samsung Electronics vs. Jupiter Fund Management |
| NetApp vs. Fulcrum Metals PLC | NetApp vs. GreenX Metals | NetApp vs. Take Two Interactive Software | NetApp vs. Scandinavian Tobacco 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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