Correlation Between Samsung Electronics and METALL ZUG

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

Diversification Opportunities for Samsung Electronics and METALL ZUG

0.25

Correlation Coefficient

Samsung Electronics  METALL ZUG

Modest diversification

The 3 months correlation between Samsung and METALL is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and METALL ZUG AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METALL ZUG AG 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 METALL ZUG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METALL ZUG AG has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and METALL ZUG go up and down completely randomly.

Pair Corralation between Samsung Electronics and METALL ZUG

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 2.53 times more return on investment than METALL ZUG. However, Samsung Electronics is 2.53 times more volatile than METALL ZUG AG. It trades about 0.11 of its potential returns per unit of risk. METALL ZUG AG is currently generating about -0.02 per unit of risk. If you would invest  72,300  in Samsung Electronics Co on December 4, 2024 and sell it today you would earn a total of  3,300  from holding Samsung Electronics Co or generate 4.56% 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.  METALL ZUG AG

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.

METALL ZUG AG

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Samsung Electronics and METALL ZUG

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

The idea behind Samsung Electronics Co and METALL ZUG AG 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.