Correlation Between Samsung Electronics and Kroger

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

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

Diversification Opportunities for Samsung Electronics and Kroger

0.3

Correlation Coefficient

Samsung Electronics  Kroger

Weak diversification

The 3 months correlation between Samsung and Kroger is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Kroger Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kroger and Samsung Electronics 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 Electronics Co are associated (or correlated) with Kroger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kroger has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Kroger go up and down completely randomly.

Pair Corralation between Samsung Electronics and Kroger

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Kroger. In addition to that, Samsung Electronics is 1.39 times more volatile than Kroger Co. It trades about -0.03 of its total potential returns per unit of risk. Kroger Co is currently generating about 0.09 per unit of volatility. If you would invest  5,941  in Kroger Co on December 4, 2024 and sell it today you would earn a total of  389.00  from holding Kroger Co or generate 6.55% return on investment over 90 days.

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

Samsung Electronics Co  vs.  Kroger Co

Samsung Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samsung Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Samsung Electronics is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Kroger

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kroger Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Kroger may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Samsung Electronics and Kroger

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

The idea behind Samsung Electronics Co and Kroger 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.