Correlation Between Samsung Electronics and Holiday Island

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

Diversification Opportunities for Samsung Electronics and Holiday Island

-0.23

Correlation Coefficient

Samsung Electronics  Holiday Island

Very good diversification

The 3 months correlation between Samsung and Holiday is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Holiday Island Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holiday Island Holdings 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 Holiday Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holiday Island Holdings has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Holiday Island go up and down completely randomly.

Pair Corralation between Samsung Electronics and Holiday Island

Assuming the 90 days horizon Samsung Electronics Co is expected to generate 0.0 times more return on investment than Holiday Island. However, Samsung Electronics Co is 229.66 times less risky than Holiday Island. It trades about 0.13 of its potential returns per unit of risk. Holiday Island Holdings is currently generating about -0.01 per unit of risk. If you would invest  4,035  in Samsung Electronics Co on December 1, 2024 and sell it today you would earn a total of  25.00  from holding Samsung Electronics Co or generate 0.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Samsung Electronics Co  vs.  Holiday Island Holdings

Samsung Electronics

Risk-Adjusted Performance

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.

Holiday Island Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Holiday Island Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Samsung Electronics and Holiday Island

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

The idea behind Samsung Electronics Co and Holiday Island Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.