Correlation Between Samsung Electronics and United States

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

Diversification Opportunities for Samsung Electronics and United States

0.33

Correlation Coefficient

Samsung Electronics  United States

Weak diversification

The 3 months correlation between Samsung and United is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and United States go up and down completely randomly.

Pair Corralation between Samsung Electronics and United States

Assuming the 90 days trading horizon Samsung Electronics is expected to generate 12.69 times less return on investment than United States. But when comparing it to its historical volatility, Samsung Electronics Co is 1.19 times less risky than United States. It trades about 0.02 of its potential returns per unit of risk. United States Steel is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,284  in United States Steel on December 2, 2024 and sell it today you would earn a total of  672.00  from holding United States Steel or generate 20.46% 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.  United States Steel

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.

United States Steel

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Samsung Electronics and United States

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

The idea behind Samsung Electronics Co and United States Steel 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.