Correlation Between Samsung Electronics and Samwha Electronics

Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Samwha Electronics 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 Samwha Electronics 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 Samwha Electronics Co, you can compare the effects of market volatilities on Samsung Electronics and Samwha Electronics 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 Samwha Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Samwha Electronics.

Diversification Opportunities for Samsung Electronics and Samwha Electronics

-0.31

Correlation Coefficient

Samsung Electronics  Samwha Electronics

Very good diversification

The 3 months correlation between Samsung and Samwha is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Samwha Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samwha Electronics 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 Samwha Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samwha Electronics has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Samwha Electronics go up and down completely randomly.

Pair Corralation between Samsung Electronics and Samwha Electronics

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Samwha Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.63 times less risky than Samwha Electronics. The stock trades about -0.04 of its potential returns per unit of risk. The Samwha Electronics Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  423,500  in Samwha Electronics Co on December 2, 2024 and sell it today you would lose (83,000) from holding Samwha Electronics Co or give up 19.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Samsung Electronics Co  vs.  Samwha Electronics Co

Samsung Electronics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Samsung Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Samwha Electronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samwha Electronics Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samwha Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Samsung Electronics and Samwha Electronics

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

The idea behind Samsung Electronics Co and Samwha Electronics 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.