Correlation Between Samsung Electronics and Axis Bank

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

Diversification Opportunities for Samsung Electronics and Axis Bank

0.73

Correlation Coefficient

Samsung Electronics  Axis Bank

Poor diversification

The 3 months correlation between Samsung and Axis is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Axis Bank Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axis Bank 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 Axis Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axis Bank has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Axis Bank go up and down completely randomly.

Pair Corralation between Samsung Electronics and Axis Bank

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 1.25 times more return on investment than Axis Bank. However, Samsung Electronics is 1.25 times more volatile than Axis Bank Ltd. It trades about -0.02 of its potential returns per unit of risk. Axis Bank Ltd is currently generating about -0.41 per unit of risk. If you would invest  76,600  in Samsung Electronics Co on October 20, 2024 and sell it today you would lose (700.00) from holding Samsung Electronics Co or give up 0.91% of portfolio value over 90 days.

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

Samsung Electronics Co  vs.  Axis Bank Ltd

Samsung Electronics

Risk-Adjusted Performance

0 of 100

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Axis Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axis Bank Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Samsung Electronics and Axis Bank

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

The idea behind Samsung Electronics Co and Axis Bank Ltd 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.