Correlation Between Samsung Electronics and Samyoung Electronics

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

Diversification Opportunities for Samsung Electronics and Samyoung Electronics

-0.83

Correlation Coefficient

Samsung Electronics  Samyoung Electronics

Pay attention - limited upside

The 3 months correlation between Samsung and Samyoung is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Samyoung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samyoung 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 Samyoung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samyoung Electronics has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Samyoung Electronics go up and down completely randomly.

Pair Corralation between Samsung Electronics and Samyoung Electronics

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Samyoung Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.08 times less risky than Samyoung Electronics. The stock trades about -0.04 of its potential returns per unit of risk. The Samyoung Electronics Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  887,777  in Samyoung Electronics Co on September 12, 2024 and sell it today you would earn a total of  101,223  from holding Samyoung Electronics Co or generate 11.4% return on investment over 90 days.

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

Samsung Electronics Co  vs.  Samyoung Electronics 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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Samyoung Electronics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samyoung Electronics Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samyoung Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and Samyoung Electronics

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

The idea behind Samsung Electronics Co and Samyoung 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.