Correlation Between Mobile Appliance and Samsung Fire

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

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

Diversification Opportunities for Mobile Appliance and Samsung Fire

-0.32

Correlation Coefficient

Mobile Appliance  Samsung Fire

Very good diversification

The 3 months correlation between Mobile and Samsung is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Mobile Appliance and Samsung Fire Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Fire Marine and Mobile Appliance 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 Mobile Appliance are associated (or correlated) with Samsung Fire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Fire Marine has no effect on the direction of Mobile Appliance i.e., Mobile Appliance and Samsung Fire go up and down completely randomly.

Pair Corralation between Mobile Appliance and Samsung Fire

Assuming the 90 days trading horizon Mobile Appliance is expected to generate 1.26 times more return on investment than Samsung Fire. However, Mobile Appliance is 1.26 times more volatile than Samsung Fire Marine. It trades about 0.29 of its potential returns per unit of risk. Samsung Fire Marine is currently generating about -0.09 per unit of risk. If you would invest  201,000  in Mobile Appliance on October 12, 2024 and sell it today you would earn a total of  20,000  from holding Mobile Appliance or generate 9.95% return on investment over 90 days.

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

Mobile Appliance  vs.  Samsung Fire Marine

Mobile Appliance

Risk-Adjusted Performance

0 of 100

Very Weak

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

Samsung Fire Marine

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Fire Marine are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Samsung Fire is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mobile Appliance and Samsung Fire

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

The idea behind Mobile Appliance and Samsung Fire Marine 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.