Correlation Between Samsung Electronics and Nintendo
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Nintendo 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 Nintendo 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 Nintendo Co ADR, you can compare the effects of market volatilities on Samsung Electronics and Nintendo 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 Nintendo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Nintendo.
Diversification Opportunities for Samsung Electronics and Nintendo
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Nintendo is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Nintendo Co ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo Co ADR 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 Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo Co ADR has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Nintendo go up and down completely randomly.
Pair Corralation between Samsung Electronics and Nintendo
Assuming the 90 days horizon Samsung Electronics is expected to generate 10.15 times less return on investment than Nintendo. But when comparing it to its historical volatility, Samsung Electronics Co is 22.6 times less risky than Nintendo. It trades about 0.1 of its potential returns per unit of risk. Nintendo Co ADR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 992.00 in Nintendo Co ADR on August 27, 2024 and sell it today you would earn a total of 325.00 from holding Nintendo Co ADR or generate 32.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Nintendo Co ADR
Performance |
| Timeline |
| Samsung Electronics |
| Nintendo Co ADR |
Samsung Electronics and Nintendo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Nintendo
The main advantage of trading using opposite Samsung Electronics and Nintendo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Nintendo 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 Nintendo will offset losses from the drop in Nintendo's long position.| Samsung Electronics vs. Universal Electronics | Samsung Electronics vs. Vizio Holding Corp | Samsung Electronics vs. VOXX International | Samsung Electronics vs. Sony Group Corp |
| Nintendo vs. Square Enix Holdings | Nintendo vs. Capcom Co Ltd | Nintendo vs. Electronic Arts | Nintendo vs. Roblox Corp |
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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