Correlation Between Samsung Electronics and Adobe
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Adobe 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 Adobe 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 Adobe Inc, you can compare the effects of market volatilities on Samsung Electronics and Adobe 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 Adobe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Adobe.
Diversification Opportunities for Samsung Electronics and Adobe
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samsung and Adobe is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Adobe Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Inc 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 Adobe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adobe Inc has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Adobe go up and down completely randomly.
Pair Corralation between Samsung Electronics and Adobe
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 3.04 times less return on investment than Adobe. In addition to that, Samsung Electronics is 1.25 times more volatile than Adobe Inc. It trades about 0.05 of its total potential returns per unit of risk. Adobe Inc is currently generating about 0.2 per unit of volatility. If you would invest 44,605 in Adobe Inc on August 29, 2024 and sell it today you would earn a total of 4,490 from holding Adobe Inc or generate 10.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Adobe Inc
Performance |
| Timeline |
| Samsung Electronics |
| Adobe Inc |
Samsung Electronics and Adobe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Adobe
The main advantage of trading using opposite Samsung Electronics and Adobe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Adobe 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 Adobe will offset losses from the drop in Adobe's long position.| Samsung Electronics vs. RELIANCE STEEL AL | Samsung Electronics vs. Daido Steel Co | Samsung Electronics vs. COSMOSTEEL HLDGS | Samsung Electronics vs. FAST RETAIL ADR |
| Adobe vs. REINET INVESTMENTS SCA | Adobe vs. WisdomTree Investments | Adobe vs. Strategic Investments AS | Adobe vs. DIVERSIFIED ROYALTY |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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