Correlation Between Samsung Electronics and SGA Solutions

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

Diversification Opportunities for Samsung Electronics and SGA Solutions

0.57

Correlation Coefficient

Samsung Electronics  SGA Solutions

Very weak diversification

The 3 months correlation between Samsung and SGA is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and SGA Solutions CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGA Solutions CoLtd 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 SGA Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGA Solutions CoLtd has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and SGA Solutions go up and down completely randomly.

Pair Corralation between Samsung Electronics and SGA Solutions

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the SGA Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.86 times less risky than SGA Solutions. The stock trades about -0.16 of its potential returns per unit of risk. The SGA Solutions CoLtd is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  49,300  in SGA Solutions CoLtd on September 28, 2024 and sell it today you would lose (2,000) from holding SGA Solutions CoLtd or give up 4.06% of portfolio value over 90 days.

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

Samsung Electronics Co  vs.  SGA Solutions CoLtd

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.

SGA Solutions CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SGA Solutions CoLtd 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.

Pair Trading with Samsung Electronics and SGA Solutions

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

The idea behind Samsung Electronics Co and SGA Solutions CoLtd 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.