Correlation Between Samsung Electronics and NEXTDC
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and NEXTDC 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 NEXTDC 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 NEXTDC LTD, you can compare the effects of market volatilities on Samsung Electronics and NEXTDC 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 NEXTDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and NEXTDC.
Diversification Opportunities for Samsung Electronics and NEXTDC
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samsung and NEXTDC is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and NEXTDC LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXTDC LTD 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 NEXTDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXTDC LTD has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and NEXTDC go up and down completely randomly.
Pair Corralation between Samsung Electronics and NEXTDC
Assuming the 90 days horizon Samsung Electronics Co is expected to generate 1.0 times more return on investment than NEXTDC. However, Samsung Electronics Co is 1.0 times less risky than NEXTDC. It trades about 0.2 of its potential returns per unit of risk. NEXTDC LTD is currently generating about -0.06 per unit of risk. If you would invest 88,800 in Samsung Electronics Co on October 11, 2024 and sell it today you would earn a total of 6,200 from holding Samsung Electronics Co or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Samsung Electronics Co vs. NEXTDC LTD
Performance |
| Timeline |
| Samsung Electronics |
| NEXTDC LTD |
Samsung Electronics and NEXTDC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and NEXTDC
The main advantage of trading using opposite Samsung Electronics and NEXTDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, NEXTDC 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 NEXTDC will offset losses from the drop in NEXTDC's long position.| Samsung Electronics vs. Ribbon Communications | Samsung Electronics vs. Iridium Communications | Samsung Electronics vs. CRISPR Therapeutics AG | Samsung Electronics vs. Geely Automobile Holdings |
| NEXTDC vs. UNIQA INSURANCE GR | NEXTDC vs. ADRIATIC METALS LS 013355 | NEXTDC vs. The Hanover Insurance | NEXTDC vs. SERI INDUSTRIAL EO |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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