Correlation Between Samsung Electronics and VeriSign
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and VeriSign 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 VeriSign 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 VeriSign, you can compare the effects of market volatilities on Samsung Electronics and VeriSign 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 VeriSign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and VeriSign.
Diversification Opportunities for Samsung Electronics and VeriSign
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and VeriSign is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and VeriSign in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VeriSign 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 VeriSign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VeriSign has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and VeriSign go up and down completely randomly.
Pair Corralation between Samsung Electronics and VeriSign
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 1.39 times more return on investment than VeriSign. However, Samsung Electronics is 1.39 times more volatile than VeriSign. It trades about 0.0 of its potential returns per unit of risk. VeriSign is currently generating about -0.02 per unit of risk. If you would invest 91,817 in Samsung Electronics Co on August 29, 2024 and sell it today you would lose (7,617) from holding Samsung Electronics Co or give up 8.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. VeriSign
Performance |
| Timeline |
| Samsung Electronics |
| VeriSign |
Samsung Electronics and VeriSign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and VeriSign
The main advantage of trading using opposite Samsung Electronics and VeriSign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, VeriSign 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 VeriSign will offset losses from the drop in VeriSign's long position.| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
| VeriSign vs. SCANDMEDICAL SOLDK 040 | VeriSign vs. Beyond Meat | VeriSign vs. MeVis Medical Solutions | VeriSign vs. Advanced Medical Solutions |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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