Correlation Between Samsung Electronics and Netflix
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Netflix 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 Netflix 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 Netflix, you can compare the effects of market volatilities on Samsung Electronics and Netflix 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 Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Netflix.
Diversification Opportunities for Samsung Electronics and Netflix
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Netflix is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix 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 Netflix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netflix has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Netflix go up and down completely randomly.
Pair Corralation between Samsung Electronics and Netflix
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Netflix. In addition to that, Samsung Electronics is 1.26 times more volatile than Netflix. It trades about -0.14 of its total potential returns per unit of risk. Netflix is currently generating about 0.4 per unit of volatility. If you would invest 1,503,200 in Netflix on August 28, 2024 and sell it today you would earn a total of 255,890 from holding Netflix or generate 17.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Netflix
Performance |
| Timeline |
| Samsung Electronics |
| Netflix |
Samsung Electronics and Netflix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Netflix
The main advantage of trading using opposite Samsung Electronics and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Netflix 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 Netflix will offset losses from the drop in Netflix's long position.| Samsung Electronics vs. DXC Technology | Samsung Electronics vs. Taiwan Semiconductor Manufacturing | Samsung Electronics vs. Ross Stores | Samsung Electronics vs. Burlington Stores |
| Netflix vs. First Majestic Silver | Netflix vs. Monster Beverage Corp | Netflix vs. McEwen Mining | Netflix vs. Micron Technology |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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