Correlation Between Samsung Electronics and NVIDIA
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and NVIDIA 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 NVIDIA 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 NVIDIA, you can compare the effects of market volatilities on Samsung Electronics and NVIDIA 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 NVIDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and NVIDIA.
Diversification Opportunities for Samsung Electronics and NVIDIA
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and NVIDIA is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA 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 NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and NVIDIA go up and down completely randomly.
Pair Corralation between Samsung Electronics and NVIDIA
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 1.6 times less return on investment than NVIDIA. But when comparing it to its historical volatility, Samsung Electronics Co is 1.03 times less risky than NVIDIA. It trades about 0.03 of its potential returns per unit of risk. NVIDIA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 12,800 in NVIDIA on August 31, 2024 and sell it today you would earn a total of 200.00 from holding NVIDIA or generate 1.56% 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. NVIDIA
Performance |
| Timeline |
| Samsung Electronics |
| NVIDIA |
Samsung Electronics and NVIDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and NVIDIA
The main advantage of trading using opposite Samsung Electronics and NVIDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, NVIDIA 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 NVIDIA will offset losses from the drop in NVIDIA's long position.| Samsung Electronics vs. Eastman Chemical | Samsung Electronics vs. Sekisui Chemical Co | Samsung Electronics vs. Computer And Technologies | Samsung Electronics vs. WESTLAKE CHEMICAL |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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