Correlation Between Samsung Electronics and Eagle Plains

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

Diversification Opportunities for Samsung Electronics and Eagle Plains

0.28

Correlation Coefficient

Samsung Electronics  Eagle Plains

Modest diversification

The 3 months correlation between Samsung and Eagle is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Eagle Plains Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Plains Resources 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 Eagle Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Plains Resources has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Eagle Plains go up and down completely randomly.

Pair Corralation between Samsung Electronics and Eagle Plains

If you would invest  6.00  in Eagle Plains Resources on December 29, 2024 and sell it today you would earn a total of  4.00  from holding Eagle Plains Resources or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Samsung Electronics Co  vs.  Eagle Plains Resources

Samsung Electronics

Risk-Adjusted Performance

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.

Eagle Plains Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Plains Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Eagle Plains reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and Eagle Plains

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

The idea behind Samsung Electronics Co and Eagle Plains Resources 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.