Correlation Between Samsung Electronics and Nokian Renkaat
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Nokian Renkaat 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 Nokian Renkaat 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 Nokian Renkaat Oyj, you can compare the effects of market volatilities on Samsung Electronics and Nokian Renkaat 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 Nokian Renkaat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Nokian Renkaat.
Diversification Opportunities for Samsung Electronics and Nokian Renkaat
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and Nokian is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Nokian Renkaat Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokian Renkaat Oyj 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 Nokian Renkaat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokian Renkaat Oyj has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Nokian Renkaat go up and down completely randomly.
Pair Corralation between Samsung Electronics and Nokian Renkaat
Assuming the 90 days horizon Samsung Electronics Co is expected to generate 1.59 times more return on investment than Nokian Renkaat. However, Samsung Electronics is 1.59 times more volatile than Nokian Renkaat Oyj. It trades about -0.08 of its potential returns per unit of risk. Nokian Renkaat Oyj is currently generating about -0.21 per unit of risk. If you would invest 97,800 in Samsung Electronics Co on September 23, 2024 and sell it today you would lose (9,800) from holding Samsung Electronics Co or give up 10.02% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Samsung Electronics Co vs. Nokian Renkaat Oyj
Performance |
Timeline |
Samsung Electronics |
Nokian Renkaat Oyj |
Samsung Electronics and Nokian Renkaat Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Samsung Electronics and Nokian Renkaat
The main advantage of trading using opposite Samsung Electronics and Nokian Renkaat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Nokian Renkaat 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 Nokian Renkaat will offset losses from the drop in Nokian Renkaat's long position.Samsung Electronics vs. Computershare Limited | Samsung Electronics vs. AXWAY SOFTWARE EO | Samsung Electronics vs. United Internet AG | Samsung Electronics vs. Singapore Telecommunications Limited |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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