Correlation Between Sangsin Energy and Samsung Electronics

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

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

Diversification Opportunities for Sangsin Energy and Samsung Electronics

0.72

Correlation Coefficient

Sangsin Energy  Samsung Electronics

Poor diversification

The 3 months correlation between Sangsin and Samsung is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sangsin Energy Display and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Sangsin Energy 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 Sangsin Energy Display are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Sangsin Energy i.e., Sangsin Energy and Samsung Electronics go up and down completely randomly.

Pair Corralation between Sangsin Energy and Samsung Electronics

Assuming the 90 days trading horizon Sangsin Energy Display is expected to generate 1.73 times more return on investment than Samsung Electronics. However, Sangsin Energy is 1.73 times more volatile than Samsung Electronics Co. It trades about 0.09 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.11 per unit of risk. If you would invest  738,000  in Sangsin Energy Display on December 26, 2024 and sell it today you would earn a total of  100,000  from holding Sangsin Energy Display or generate 13.55% return on investment over 90 days.

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

Sangsin Energy Display  vs.  Samsung Electronics Co

Sangsin Energy Display

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sangsin Energy Display are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sangsin Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Samsung Electronics

Risk-Adjusted Performance

OK

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

Pair Trading with Sangsin Energy and Samsung Electronics

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

The idea behind Sangsin Energy Display and Samsung 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.