Correlation Between Samsung Electronics and Avis Budget

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

Diversification Opportunities for Samsung Electronics and Avis Budget

-0.54

Correlation Coefficient

Samsung Electronics  Avis Budget

Excellent diversification

The 3 months correlation between Samsung and Avis is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Avis Budget Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avis Budget Group 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 Avis Budget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avis Budget Group has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Avis Budget go up and down completely randomly.

Pair Corralation between Samsung Electronics and Avis Budget

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.4 times more return on investment than Avis Budget. However, Samsung Electronics Co is 2.48 times less risky than Avis Budget. It trades about 0.07 of its potential returns per unit of risk. Avis Budget Group is currently generating about -0.03 per unit of risk. If you would invest  1,950,000  in Samsung Electronics Co on December 29, 2024 and sell it today you would earn a total of  143,892  from holding Samsung Electronics Co or generate 7.38% return on investment over 90 days.

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

Samsung Electronics Co  vs.  Avis Budget Group

Samsung Electronics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Samsung Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Avis Budget Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avis Budget Group 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 Avis Budget

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

The idea behind Samsung Electronics Co and Avis Budget Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.