Correlation Between Samsung Card and Aurora World

Can any of the company-specific risk be diversified away by investing in both Samsung Card and Aurora World 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 Card and Aurora World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samsung Card Co and Aurora World, you can compare the effects of market volatilities on Samsung Card and Aurora World 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 Card with a short position of Aurora World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Card and Aurora World.

Diversification Opportunities for Samsung Card and Aurora World

0.35

Correlation Coefficient

Samsung Card  Aurora World

Weak diversification

The 3 months correlation between Samsung and Aurora is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Card Co and Aurora World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora World and Samsung Card 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 Card Co are associated (or correlated) with Aurora World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora World has no effect on the direction of Samsung Card i.e., Samsung Card and Aurora World go up and down completely randomly.

Pair Corralation between Samsung Card and Aurora World

Assuming the 90 days trading horizon Samsung Card Co is expected to generate 1.15 times more return on investment than Aurora World. However, Samsung Card is 1.15 times more volatile than Aurora World. It trades about 0.05 of its potential returns per unit of risk. Aurora World is currently generating about -0.03 per unit of risk. If you would invest  2,856,867  in Samsung Card Co on October 10, 2024 and sell it today you would earn a total of  1,118,133  from holding Samsung Card Co or generate 39.14% return on investment over 90 days.

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

Samsung Card Co  vs.  Aurora World

Samsung Card

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsung Card Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Samsung Card is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aurora World

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora World are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aurora World sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Card and Aurora World

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

The idea behind Samsung Card Co and Aurora World 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.