Correlation Between Samsung Electronics and Alphabet
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Alphabet 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 Alphabet 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 Alphabet Inc, you can compare the effects of market volatilities on Samsung Electronics and Alphabet 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 Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Alphabet.
Diversification Opportunities for Samsung Electronics and Alphabet
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Alphabet is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Alphabet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Alphabet go up and down completely randomly.
Pair Corralation between Samsung Electronics and Alphabet
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Alphabet. In addition to that, Samsung Electronics is 1.1 times more volatile than Alphabet Inc. It trades about -0.18 of its total potential returns per unit of risk. Alphabet Inc is currently generating about 0.17 per unit of volatility. If you would invest 314,132 in Alphabet Inc on November 2, 2024 and sell it today you would earn a total of 103,068 from holding Alphabet Inc or generate 32.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.03% |
| Values | Daily Returns |
Samsung Electronics Co vs. Alphabet Inc
Performance |
| Timeline |
| Samsung Electronics |
| Alphabet |
Samsung Electronics and Alphabet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Alphabet
The main advantage of trading using opposite Samsung Electronics and Alphabet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Alphabet 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 Alphabet will offset losses from the drop in Alphabet's long position.| Samsung Electronics vs. KB Home | Samsung Electronics vs. First Majestic Silver | Samsung Electronics vs. Desarrolladora Homex SAB | Samsung Electronics vs. Verizon Communications |
| Alphabet vs. Grupo Sports World | Alphabet vs. CVS Health | Alphabet vs. First Republic Bank | Alphabet vs. Verizon Communications |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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