Correlation Between Samsung Publishing and ABCO Electronics

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

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

Diversification Opportunities for Samsung Publishing and ABCO Electronics

0.17

Correlation Coefficient

Samsung Publishing  ABCO Electronics

Average diversification

The 3 months correlation between Samsung and ABCO is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Publishing Co and ABCO Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABCO Electronics and Samsung Publishing 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 Publishing Co are associated (or correlated) with ABCO Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABCO Electronics has no effect on the direction of Samsung Publishing i.e., Samsung Publishing and ABCO Electronics go up and down completely randomly.

Pair Corralation between Samsung Publishing and ABCO Electronics

Assuming the 90 days trading horizon Samsung Publishing Co is expected to under-perform the ABCO Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Publishing Co is 1.92 times less risky than ABCO Electronics. The stock trades about -0.01 of its potential returns per unit of risk. The ABCO Electronics Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  462,000  in ABCO Electronics Co on December 24, 2024 and sell it today you would earn a total of  113,000  from holding ABCO Electronics Co or generate 24.46% return on investment over 90 days.

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

Samsung Publishing Co  vs.  ABCO Electronics Co

Samsung Publishing

Risk-Adjusted Performance

Very Weak

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

ABCO Electronics

Risk-Adjusted Performance

OK

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

Pair Trading with Samsung Publishing and ABCO Electronics

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

The idea behind Samsung Publishing Co and ABCO 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.