Correlation Between Samsung Electronics and Lennar Corp

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

Diversification Opportunities for Samsung Electronics and Lennar Corp

0.73

Correlation Coefficient

Samsung Electronics  Lennar Corp

Poor diversification

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

Pair Corralation between Samsung Electronics and Lennar Corp

Assuming the 90 days trading horizon Samsung Electronics is expected to generate 4.41 times less return on investment than Lennar Corp. In addition to that, Samsung Electronics is 1.57 times more volatile than Lennar Corp Cl. It trades about 0.01 of its total potential returns per unit of risk. Lennar Corp Cl is currently generating about 0.09 per unit of volatility. If you would invest  13,855  in Lennar Corp Cl on October 23, 2024 and sell it today you would earn a total of  266.00  from holding Lennar Corp Cl or generate 1.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Samsung Electronics Co  vs.  Lennar Corp Cl

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 latest unsteady 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.

Lennar Corp Cl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lennar Corp Cl 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.

Pair Trading with Samsung Electronics and Lennar Corp

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

The idea behind Samsung Electronics Co and Lennar Corp Cl 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.