Correlation Between Lockheed Martin and Samsung Electronics

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

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

Diversification Opportunities for Lockheed Martin and Samsung Electronics

-0.26

Correlation Coefficient

Lockheed Martin  Samsung Electronics

Very good diversification

The 3 months correlation between Lockheed and Samsung is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Lockheed Martin 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 Lockheed Martin 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 Lockheed Martin i.e., Lockheed Martin and Samsung Electronics go up and down completely randomly.

Pair Corralation between Lockheed Martin and Samsung Electronics

Assuming the 90 days trading horizon Lockheed Martin is expected to under-perform the Samsung Electronics. In addition to that, Lockheed Martin is 1.15 times more volatile than Samsung Electronics Co. It trades about -0.06 of its total potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.07 per unit of volatility. If you would invest  1,950,000  in Samsung Electronics Co on December 30, 2024 and sell it today you would earn a total of  143,892  from holding Samsung Electronics Co or generate 7.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Lockheed Martin  vs.  Samsung Electronics Co

Lockheed Martin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lockheed Martin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Samsung Electronics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Samsung Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lockheed Martin and Samsung Electronics

The main advantage of trading using opposite Lockheed Martin and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin 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 Lockheed Martin 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.