Correlation Between Samsung Electronics and Flow Traders

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

Diversification Opportunities for Samsung Electronics and Flow Traders

0.65

Correlation Coefficient

Samsung Electronics  Flow Traders

Poor diversification

The 3 months correlation between Samsung and Flow is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders NV 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 Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Flow Traders go up and down completely randomly.

Pair Corralation between Samsung Electronics and Flow Traders

Assuming the 90 days trading horizon Samsung Electronics is expected to generate 1.71 times less return on investment than Flow Traders. But when comparing it to its historical volatility, Samsung Electronics Co is 1.05 times less risky than Flow Traders. It trades about 0.13 of its potential returns per unit of risk. Flow Traders NV is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,148  in Flow Traders NV on December 28, 2024 and sell it today you would earn a total of  619.00  from holding Flow Traders NV or generate 28.82% return on investment over 90 days.

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

Samsung Electronics Co  vs.  Flow Traders NV

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 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Samsung Electronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Flow Traders NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Traders NV are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Flow Traders unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and Flow Traders

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

The idea behind Samsung Electronics Co and Flow Traders NV 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.