Correlation Between Samsung Electronics and RedcapTour

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

Diversification Opportunities for Samsung Electronics and RedcapTour

-0.7

Correlation Coefficient

Samsung Electronics  RedcapTour

Excellent diversification

The 3 months correlation between Samsung and RedcapTour is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and RedcapTour Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RedcapTour 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 RedcapTour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RedcapTour has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and RedcapTour go up and down completely randomly.

Pair Corralation between Samsung Electronics and RedcapTour

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 1.27 times more return on investment than RedcapTour. However, Samsung Electronics is 1.27 times more volatile than RedcapTour Co. It trades about -0.01 of its potential returns per unit of risk. RedcapTour Co is currently generating about -0.04 per unit of risk. If you would invest  5,560,000  in Samsung Electronics Co on October 15, 2024 and sell it today you would lose (30,000) from holding Samsung Electronics Co or give up 0.54% of portfolio value over 90 days.

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

Samsung Electronics Co  vs.  RedcapTour 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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

RedcapTour

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Samsung Electronics and RedcapTour

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

The idea behind Samsung Electronics Co and RedcapTour 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.