Correlation Between Samsung Electronics and Amazon
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Amazon 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 Amazon 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 Amazon Inc, you can compare the effects of market volatilities on Samsung Electronics and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Amazon.
Diversification Opportunities for Samsung Electronics and Amazon
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Amazon is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Amazon go up and down completely randomly.
Pair Corralation between Samsung Electronics and Amazon
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Amazon. In addition to that, Samsung Electronics is 1.08 times more volatile than Amazon Inc. It trades about -0.01 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.09 per unit of volatility. If you would invest 11,750 in Amazon Inc on August 26, 2024 and sell it today you would earn a total of 7,192 from holding Amazon Inc or generate 61.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Amazon Inc
Performance |
| Timeline |
| Samsung Electronics |
| Amazon Inc |
Samsung Electronics and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Amazon
The main advantage of trading using opposite Samsung Electronics and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| Samsung Electronics vs. Amazon Inc | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tesla Inc | Samsung Electronics vs. Alphabet Class A |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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