Correlation Between Samsung Electronics and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Verizon Communications 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 Verizon Communications 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 Verizon Communications, you can compare the effects of market volatilities on Samsung Electronics and Verizon Communications 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 Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Verizon Communications.
Diversification Opportunities for Samsung Electronics and Verizon Communications
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Samsung and Verizon is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Verizon Communications go up and down completely randomly.
Pair Corralation between Samsung Electronics and Verizon Communications
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Verizon Communications. In addition to that, Samsung Electronics is 2.75 times more volatile than Verizon Communications. It trades about -0.02 of its total potential returns per unit of risk. Verizon Communications is currently generating about 0.23 per unit of volatility. If you would invest 4,155 in Verizon Communications on August 29, 2024 and sell it today you would earn a total of 260.00 from holding Verizon Communications or generate 6.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Verizon Communications
Performance |
| Timeline |
| Samsung Electronics |
| Verizon Communications |
Samsung Electronics and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Verizon Communications
The main advantage of trading using opposite Samsung Electronics and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Verizon Communications 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 Verizon Communications will offset losses from the drop in Verizon Communications' 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 |
| Verizon Communications vs. Lendinvest PLC | Verizon Communications vs. Neometals | Verizon Communications vs. Coor Service Management | Verizon Communications 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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