Correlation Between Samsung Electronics and Microsoft
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Microsoft 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 Microsoft 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 Microsoft, you can compare the effects of market volatilities on Samsung Electronics and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Microsoft.
Diversification Opportunities for Samsung Electronics and Microsoft
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Microsoft is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Microsoft go up and down completely randomly.
Pair Corralation between Samsung Electronics and Microsoft
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Microsoft. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.04 times less risky than Microsoft. The stock trades about -0.11 of its potential returns per unit of risk. The Microsoft is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 41,135 in Microsoft on November 4, 2024 and sell it today you would lose (930.00) from holding Microsoft or give up 2.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Microsoft
Performance |
| Timeline |
| Samsung Electronics |
| Microsoft |
Samsung Electronics and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Microsoft
The main advantage of trading using opposite Samsung Electronics and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
| Microsoft vs. SHIP HEALTHCARE HLDGINC | Microsoft vs. CLOVER HEALTH INV | Microsoft vs. WESANA HEALTH HOLD | Microsoft vs. PURETECH HEALTH PLC |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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