Correlation Between Samsung Electronics and Adobe

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

Diversification Opportunities for Samsung Electronics and Adobe

-0.23

Correlation Coefficient

Samsung Electronics  Adobe

Very good diversification

The 3 months correlation between Samsung and Adobe is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Adobe Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Inc 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 Adobe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adobe Inc has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Adobe go up and down completely randomly.

Pair Corralation between Samsung Electronics and Adobe

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Adobe. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.05 times less risky than Adobe. The stock trades about -0.09 of its potential returns per unit of risk. The Adobe Inc is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,026,129  in Adobe Inc on September 29, 2024 and sell it today you would lose (121,029) from holding Adobe Inc or give up 11.79% of portfolio value over 90 days.

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

Samsung Electronics Co  vs.  Adobe Inc

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 weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Adobe Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adobe Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Samsung Electronics and Adobe

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

The idea behind Samsung Electronics Co and Adobe Inc 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.