Correlation Between Samsung Electronics and ARIA Wireless

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

Diversification Opportunities for Samsung Electronics and ARIA Wireless

-1.0

Correlation Coefficient

Samsung Electronics  ARIA Wireless

Pay attention - limited upside

The 3 months correlation between Samsung and ARIA is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and ARIA Wireless Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARIA Wireless Systems 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 ARIA Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARIA Wireless Systems has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and ARIA Wireless go up and down completely randomly.

Pair Corralation between Samsung Electronics and ARIA Wireless

Assuming the 90 days horizon Samsung Electronics is expected to generate 664.81 times less return on investment than ARIA Wireless. But when comparing it to its historical volatility, Samsung Electronics Co is 919.79 times less risky than ARIA Wireless. It trades about 0.09 of its potential returns per unit of risk. ARIA Wireless Systems is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  18.00  in ARIA Wireless Systems on October 23, 2024 and sell it today you would lose (17.99) from holding ARIA Wireless Systems or give up 99.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Strong
Accuracy	99.6%
Values	Daily Returns

Samsung Electronics Co  vs.  ARIA Wireless Systems

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. 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.

ARIA Wireless Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARIA Wireless Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, ARIA Wireless 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 ARIA Wireless

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

The idea behind Samsung Electronics Co and ARIA Wireless Systems 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.