Correlation Between KRISPY KREME and Samsung Electronics

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

By analyzing existing cross correlation between KRISPY KREME DL 01 and Samsung Electronics Co, you can compare the effects of market volatilities on KRISPY KREME 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 KRISPY KREME with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and Samsung Electronics.

Diversification Opportunities for KRISPY KREME and Samsung Electronics

0.1

Correlation Coefficient

KRISPY KREME  Samsung Electronics

Average diversification

The 3 months correlation between KRISPY and Samsung is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and KRISPY KREME 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 KRISPY KREME DL 01 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 KRISPY KREME i.e., KRISPY KREME and Samsung Electronics go up and down completely randomly.

Pair Corralation between KRISPY KREME and Samsung Electronics

Assuming the 90 days horizon KRISPY KREME DL 01 is expected to generate 0.93 times more return on investment than Samsung Electronics. However, KRISPY KREME DL 01 is 1.07 times less risky than Samsung Electronics. It trades about -0.04 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.12 per unit of risk. If you would invest  982.00  in KRISPY KREME DL 01 on September 27, 2024 and sell it today you would lose (77.00) from holding KRISPY KREME DL 01 or give up 7.84% of portfolio value over 90 days.

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

KRISPY KREME DL 01  vs.  Samsung Electronics Co

KRISPY KREME DL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KRISPY KREME DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, KRISPY KREME is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with KRISPY KREME and Samsung Electronics

The main advantage of trading using opposite KRISPY KREME and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRISPY KREME 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 KRISPY KREME DL 01 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .