Correlation Between Samsung Electronics and DXC Technology
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and DXC Technology 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 DXC Technology 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 DXC Technology Co, you can compare the effects of market volatilities on Samsung Electronics and DXC Technology 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 DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and DXC Technology.
Diversification Opportunities for Samsung Electronics and DXC Technology
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and DXC is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology 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 DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and DXC Technology go up and down completely randomly.
Pair Corralation between Samsung Electronics and DXC Technology
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 6.26 times less return on investment than DXC Technology. But when comparing it to its historical volatility, Samsung Electronics Co is 1.23 times less risky than DXC Technology. It trades about 0.04 of its potential returns per unit of risk. DXC Technology Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,860 in DXC Technology Co on August 27, 2024 and sell it today you would earn a total of 273.00 from holding DXC Technology Co or generate 14.68% 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. DXC Technology Co
Performance |
| Timeline |
| Samsung Electronics |
| DXC Technology |
Samsung Electronics and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and DXC Technology
The main advantage of trading using opposite Samsung Electronics and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, DXC Technology 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 DXC Technology will offset losses from the drop in DXC Technology's long position.| Samsung Electronics vs. Apple Inc | Samsung Electronics vs. Apple Inc | Samsung Electronics vs. Apple Inc | Samsung Electronics vs. Apple Inc |
| DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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