Correlation Between Samsung Electronics and Magnora ASA

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

Diversification Opportunities for Samsung Electronics and Magnora ASA

-0.67

Correlation Coefficient

Samsung Electronics  Magnora ASA

Excellent diversification

The 3 months correlation between Samsung and Magnora is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Magnora ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnora ASA 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 Magnora ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnora ASA has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Magnora ASA go up and down completely randomly.

Pair Corralation between Samsung Electronics and Magnora ASA

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 1.05 times more return on investment than Magnora ASA. However, Samsung Electronics is 1.05 times more volatile than Magnora ASA. It trades about -0.04 of its potential returns per unit of risk. Magnora ASA is currently generating about -0.08 per unit of risk. If you would invest  81,500  in Samsung Electronics Co on December 2, 2024 and sell it today you would lose (4,600) from holding Samsung Electronics Co or give up 5.64% of portfolio value over 90 days.

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

Samsung Electronics Co  vs.  Magnora ASA

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.

Magnora ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magnora ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Samsung Electronics and Magnora ASA

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

The idea behind Samsung Electronics Co and Magnora ASA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.