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
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Samsung and Verizon is 0.13. 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. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.95 times less risky than Verizon Communications. The stock trades about -0.3 of its potential returns per unit of risk. The Verizon Communications is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 82,280 in Verizon Communications on November 5, 2024 and sell it today you would lose (711.00) from holding Verizon Communications or give up 0.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| 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. Apple Inc | Samsung Electronics vs. Royal Caribbean Group | Samsung Electronics vs. Procter Gamble DRC | Samsung Electronics vs. Microsoft |
| Verizon Communications vs. First Republic Bank | Verizon Communications vs. Southern Copper | Verizon Communications vs. GMxico Transportes SAB | Verizon Communications vs. Costco Wholesale |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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