Correlation Between Samsung Electronics and Broadridge Financial

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

Diversification Opportunities for Samsung Electronics and Broadridge Financial

0.22

Correlation Coefficient

Samsung Electronics  Broadridge Financial

Modest diversification

The 3 months correlation between Samsung and Broadridge is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Broadridge Financial Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadridge Financial 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 Broadridge Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadridge Financial has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Broadridge Financial go up and down completely randomly.

Pair Corralation between Samsung Electronics and Broadridge Financial

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Broadridge Financial. In addition to that, Samsung Electronics is 2.02 times more volatile than Broadridge Financial Solutions. It trades about -0.05 of its total potential returns per unit of risk. Broadridge Financial Solutions is currently generating about 0.2 per unit of volatility. If you would invest  22,554  in Broadridge Financial Solutions on December 5, 2024 and sell it today you would earn a total of  1,817  from holding Broadridge Financial Solutions or generate 8.06% 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.  Broadridge Financial Solutions

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Broadridge Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Broadridge Financial Solutions are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Broadridge Financial 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 Broadridge Financial

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

The idea behind Samsung Electronics Co and Broadridge Financial Solutions 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.