Correlation Between Samsung Electronics and Nokia
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Nokia 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 Nokia 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 Nokia, you can compare the effects of market volatilities on Samsung Electronics and Nokia 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 Nokia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Nokia.
Diversification Opportunities for Samsung Electronics and Nokia
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Samsung and Nokia is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Nokia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia 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 Nokia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Nokia go up and down completely randomly.
Pair Corralation between Samsung Electronics and Nokia
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.67 times more return on investment than Nokia. However, Samsung Electronics Co is 1.49 times less risky than Nokia. It trades about 0.31 of its potential returns per unit of risk. Nokia is currently generating about 0.1 per unit of risk. If you would invest 1,867,180 in Samsung Electronics Co on November 28, 2024 and sell it today you would earn a total of 215,820 from holding Samsung Electronics Co or generate 11.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Samsung Electronics Co vs. Nokia
Performance |
| Timeline |
| Samsung Electronics |
| Nokia |
Samsung Electronics and Nokia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Nokia
The main advantage of trading using opposite Samsung Electronics and Nokia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Nokia 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 Nokia will offset losses from the drop in Nokia's long position.| Samsung Electronics vs. Prudential Financial | Samsung Electronics vs. Salesforce, | Samsung Electronics vs. Cognizant Technology Solutions | Samsung Electronics vs. Delta Air Lines |
| Nokia vs. Capital One Financial | Nokia vs. Cognizant Technology Solutions | Nokia vs. Ameriprise Financial | Nokia vs. Southwest Airlines |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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