Correlation Between Samsung Electronics and Samsung Publishing

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

Diversification Opportunities for Samsung Electronics and Samsung Publishing

0.66

Correlation Coefficient

Samsung Electronics  Samsung Publishing

Poor diversification

The 3 months correlation between Samsung and Samsung is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Samsung Publishing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Publishing 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 Samsung Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Publishing has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Samsung Publishing go up and down completely randomly.

Pair Corralation between Samsung Electronics and Samsung Publishing

Assuming the 90 days trading horizon Samsung Electronics is expected to generate 2.39 times less return on investment than Samsung Publishing. But when comparing it to its historical volatility, Samsung Electronics Co is 1.52 times less risky than Samsung Publishing. It trades about 0.04 of its potential returns per unit of risk. Samsung Publishing Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,430,744  in Samsung Publishing Co on December 4, 2024 and sell it today you would earn a total of  118,256  from holding Samsung Publishing Co or generate 8.27% return on investment over 90 days.

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

Samsung Electronics Co  vs.  Samsung Publishing Co

Samsung Electronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 3 (%) 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.

Samsung Publishing

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Publishing Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samsung Publishing may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Samsung Electronics and Samsung Publishing

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

The idea behind Samsung Electronics Co and Samsung Publishing 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.