Correlation Between Samsung Electronics and Development Technologies

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

Diversification Opportunities for Samsung Electronics and Development Technologies

0.0

Correlation Coefficient

Samsung Electronics  Development Technologies

Pay attention - limited upside

The 3 months correlation between Samsung and Development is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Development Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Development Technologies 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 Development Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Development Technologies has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Development Technologies go up and down completely randomly.

Pair Corralation between Samsung Electronics and Development Technologies

Assuming the 90 days horizon Samsung Electronics is expected to generate 25.09 times less return on investment than Development Technologies. But when comparing it to its historical volatility, Samsung Electronics Co is 97.65 times less risky than Development Technologies. It trades about 0.09 of its potential returns per unit of risk. Development Technologies Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  970.00  in Development Technologies Corp on October 13, 2024 and sell it today you would lose (70.00) from holding Development Technologies Corp or give up 7.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Samsung Electronics Co  vs.  Development Technologies Corp

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.

Development Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Development Technologies Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Development Technologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and Development Technologies

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

The idea behind Samsung Electronics Co and Development Technologies Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..