Correlation Between Samsung Electronics and Legal General

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

Diversification Opportunities for Samsung Electronics and Legal General

-0.45

Correlation Coefficient

Samsung Electronics  Legal General

Very good diversification

The 3 months correlation between Samsung and Legal is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Legal General Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General Group 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 Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General Group has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Legal General go up and down completely randomly.

Pair Corralation between Samsung Electronics and Legal General

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Legal General. In addition to that, Samsung Electronics is 1.33 times more volatile than Legal General Group. It trades about -0.04 of its total potential returns per unit of risk. Legal General Group is currently generating about 0.13 per unit of volatility. If you would invest  21,750  in Legal General Group on November 20, 2024 and sell it today you would earn a total of  2,430  from holding Legal General Group or generate 11.17% return on investment over 90 days.

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

Samsung Electronics Co  vs.  Legal General Group

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.

Legal General Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Legal General Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Legal General may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Samsung Electronics and Legal General

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

The idea behind Samsung Electronics Co and Legal General Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.