Correlation Between Samsung Electronics and New Residential

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

Diversification Opportunities for Samsung Electronics and New Residential

0.48

Correlation Coefficient

Samsung Electronics  New Residential

Very weak diversification

The 3 months correlation between Samsung and New is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve 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 New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and New Residential go up and down completely randomly.

Pair Corralation between Samsung Electronics and New Residential

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 1.69 times more return on investment than New Residential. However, Samsung Electronics is 1.69 times more volatile than New Residential Investment. It trades about 0.09 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.05 per unit of risk. If you would invest  90,450  in Samsung Electronics Co on December 30, 2024 and sell it today you would earn a total of  10,050  from holding Samsung Electronics Co or generate 11.11% return on investment over 90 days.

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

Samsung Electronics Co  vs.  New Residential Investment

Samsung Electronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Samsung Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

New Residential Inve

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New Residential Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, New Residential 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 New Residential

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

The idea behind Samsung Electronics Co and New Residential Investment 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 Global Correlations module to find global opportunities by holding instruments from different markets.