Correlation Between Samsung Electronics and Microsoft
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Microsoft 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 Microsoft 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 Microsoft, you can compare the effects of market volatilities on Samsung Electronics and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Microsoft.
Diversification Opportunities for Samsung Electronics and Microsoft
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Samsung and Microsoft is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Microsoft go up and down completely randomly.
Pair Corralation between Samsung Electronics and Microsoft
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Microsoft. In addition to that, Samsung Electronics is 3.53 times more volatile than Microsoft. It trades about -0.03 of its total potential returns per unit of risk. Microsoft is currently generating about 0.34 per unit of volatility. If you would invest 41,968 in Microsoft on September 12, 2024 and sell it today you would earn a total of 3,032 from holding Microsoft or generate 7.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Microsoft
Performance |
| Timeline |
| Samsung Electronics |
| Microsoft |
Samsung Electronics and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Microsoft
The main advantage of trading using opposite Samsung Electronics and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft'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 |
| Microsoft vs. Taylor Maritime Investments | Microsoft vs. Oakley Capital Investments | Microsoft vs. Hansa Investment | Microsoft vs. Tatton Asset 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |