Correlation Between Samsung Electronics and Arlington Asset

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

Diversification Opportunities for Samsung Electronics and Arlington Asset

0.69

Correlation Coefficient

Samsung Electronics  Arlington Asset

Poor diversification

The 3 months correlation between Samsung and Arlington is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Arlington Asset Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arlington Asset 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 Arlington Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arlington Asset Inve has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Arlington Asset go up and down completely randomly.

Pair Corralation between Samsung Electronics and Arlington Asset

Assuming the 90 days horizon Samsung Electronics is expected to generate 58.1 times less return on investment than Arlington Asset. But when comparing it to its historical volatility, Samsung Electronics Co is 61.31 times less risky than Arlington Asset. It trades about 0.1 of its potential returns per unit of risk. Arlington Asset Investment is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  287.00  in Arlington Asset Investment on September 10, 2024 and sell it today you would earn a total of  182.00  from holding Arlington Asset Investment or generate 63.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	29.9%
Values	Daily Returns

Samsung Electronics Co  vs.  Arlington Asset Investment

Samsung Electronics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Samsung Electronics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Arlington Asset Inve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arlington Asset Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Arlington Asset is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Samsung Electronics and Arlington Asset

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

The idea behind Samsung Electronics Co and Arlington Asset 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.