Correlation Between Microsoft and Samsung KODEX

Can any of the company-specific risk be diversified away by investing in both Microsoft and Samsung KODEX 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 Microsoft and Samsung KODEX into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microsoft and Samsung KODEX Leverage, you can compare the effects of market volatilities on Microsoft and Samsung KODEX 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 Microsoft with a short position of Samsung KODEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Samsung KODEX.

Diversification Opportunities for Microsoft and Samsung KODEX

-0.04

Correlation Coefficient

Microsoft  Samsung KODEX

Good diversification

The 3 months correlation between Microsoft and Samsung is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Samsung KODEX Leverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung KODEX Leverage and Microsoft 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 Microsoft are associated (or correlated) with Samsung KODEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung KODEX Leverage has no effect on the direction of Microsoft i.e., Microsoft and Samsung KODEX go up and down completely randomly.

Pair Corralation between Microsoft and Samsung KODEX

Given the investment horizon of 90 days Microsoft is expected to under-perform the Samsung KODEX. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.29 times less risky than Samsung KODEX. The stock trades about -0.11 of its potential returns per unit of risk. The Samsung KODEX Leverage is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,408,000  in Samsung KODEX Leverage on December 25, 2024 and sell it today you would earn a total of  297,500  from holding Samsung KODEX Leverage or generate 21.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.92%
Values	Daily Returns

Microsoft  vs.  Samsung KODEX Leverage

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Samsung KODEX Leverage

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung KODEX Leverage are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samsung KODEX sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Samsung KODEX

The main advantage of trading using opposite Microsoft and Samsung KODEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Samsung KODEX 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 Samsung KODEX will offset losses from the drop in Samsung KODEX's long position.

The idea behind Microsoft and Samsung KODEX Leverage pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.