Correlation Between Samsung Electronics and ELECTRONIC ARTS
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and ELECTRONIC ARTS 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 ELECTRONIC ARTS 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 ELECTRONIC ARTS, you can compare the effects of market volatilities on Samsung Electronics and ELECTRONIC ARTS 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 ELECTRONIC ARTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and ELECTRONIC ARTS.
Diversification Opportunities for Samsung Electronics and ELECTRONIC ARTS
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and ELECTRONIC is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and ELECTRONIC ARTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTRONIC ARTS 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 ELECTRONIC ARTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELECTRONIC ARTS has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and ELECTRONIC ARTS go up and down completely randomly.
Pair Corralation between Samsung Electronics and ELECTRONIC ARTS
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the ELECTRONIC ARTS. In addition to that, Samsung Electronics is 1.49 times more volatile than ELECTRONIC ARTS. It trades about -0.02 of its total potential returns per unit of risk. ELECTRONIC ARTS is currently generating about 0.06 per unit of volatility. If you would invest 11,618 in ELECTRONIC ARTS on August 31, 2024 and sell it today you would earn a total of 3,802 from holding ELECTRONIC ARTS or generate 32.73% 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. ELECTRONIC ARTS
Performance |
| Timeline |
| Samsung Electronics |
| ELECTRONIC ARTS |
Samsung Electronics and ELECTRONIC ARTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and ELECTRONIC ARTS
The main advantage of trading using opposite Samsung Electronics and ELECTRONIC ARTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, ELECTRONIC ARTS 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 ELECTRONIC ARTS will offset losses from the drop in ELECTRONIC ARTS's long position.| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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