Correlation Between Samsung Electronics and Vanguard World

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

Diversification Opportunities for Samsung Electronics and Vanguard World

0.52

Correlation Coefficient

Samsung Electronics  Vanguard World

Very weak diversification

The 3 months correlation between Samsung and Vanguard is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Vanguard World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard World 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 Vanguard World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard World has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Vanguard World go up and down completely randomly.

Pair Corralation between Samsung Electronics and Vanguard World

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Vanguard World. In addition to that, Samsung Electronics is 2.28 times more volatile than Vanguard World. It trades about -0.02 of its total potential returns per unit of risk. Vanguard World is currently generating about 0.08 per unit of volatility. If you would invest  455,423  in Vanguard World on October 22, 2024 and sell it today you would earn a total of  83,077  from holding Vanguard World or generate 18.24% 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.  Vanguard World

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 weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Vanguard World

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard World has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Vanguard World is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Samsung Electronics and Vanguard World

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

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