Correlation Between Samsung Electronics and Southern Copper

Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Southern Copper 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 Southern Copper 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 Southern Copper Corp, you can compare the effects of market volatilities on Samsung Electronics and Southern Copper 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 Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Southern Copper.

Diversification Opportunities for Samsung Electronics and Southern Copper

0.51

Correlation Coefficient

Samsung Electronics  Southern Copper

Very weak diversification

The 3 months correlation between Samsung and Southern is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Southern Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper Corp 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 Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper Corp has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Southern Copper go up and down completely randomly.

Pair Corralation between Samsung Electronics and Southern Copper

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.92 times more return on investment than Southern Copper. However, Samsung Electronics Co is 1.09 times less risky than Southern Copper. It trades about -0.05 of its potential returns per unit of risk. Southern Copper Corp is currently generating about -0.1 per unit of risk. If you would invest  80,800  in Samsung Electronics Co on December 5, 2024 and sell it today you would lose (5,200) from holding Samsung Electronics Co or give up 6.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Samsung Electronics Co  vs.  Southern Copper Corp

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Southern Copper Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Southern Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Samsung Electronics and Southern Copper

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

The idea behind Samsung Electronics Co and Southern Copper Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.