Correlation Between Samsung Electronics and Samyoung M

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

Diversification Opportunities for Samsung Electronics and Samyoung M

-0.2

Correlation Coefficient

Samsung Electronics  Samyoung M

Good diversification

The 3 months correlation between Samsung and Samyoung is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Samyoung M Tek Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samyoung M Tek 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 Samyoung M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samyoung M Tek has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Samyoung M go up and down completely randomly.

Pair Corralation between Samsung Electronics and Samyoung M

Assuming the 90 days trading horizon Samsung Electronics is expected to generate 14.27 times less return on investment than Samyoung M. But when comparing it to its historical volatility, Samsung Electronics Co is 2.03 times less risky than Samyoung M. It trades about 0.02 of its potential returns per unit of risk. Samyoung M Tek Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  455,500  in Samyoung M Tek Co on October 22, 2024 and sell it today you would earn a total of  35,500  from holding Samyoung M Tek Co or generate 7.79% return on investment over 90 days.

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

Samsung Electronics Co  vs.  Samyoung M Tek 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 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.

Samyoung M Tek

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Samyoung M Tek Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samyoung M sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and Samyoung M

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

The idea behind Samsung Electronics Co and Samyoung M Tek 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.