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

-0.53

Correlation Coefficient

Samsung Electronics  DXC Technology

Excellent diversification

The 3 months correlation between Samsung and DXC is -0.53. 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 Co is expected to under-perform the DXC Technology. In addition to that, Samsung Electronics is 1.16 times more volatile than DXC Technology Co. It trades about -0.12 of its total potential returns per unit of risk. DXC Technology Co is currently generating about 0.09 per unit of volatility. If you would invest  1,863  in DXC Technology Co on September 2, 2024 and sell it today you would earn a total of  223.00  from holding DXC Technology Co or generate 11.97% 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

Samsung Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsung Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

DXC Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DXC Technology Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, DXC Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

The idea behind Samsung Electronics Co and DXC Technology Co 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.