Correlation Between Samsung Electronics and Quadro Acquisition

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

Diversification Opportunities for Samsung Electronics and Quadro Acquisition

0.84

Correlation Coefficient

Samsung Electronics  Quadro Acquisition

Very poor diversification

The 3 months correlation between Samsung and Quadro is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Quadro Acquisition One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quadro Acquisition One 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 Quadro Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quadro Acquisition One has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Quadro Acquisition go up and down completely randomly.

Pair Corralation between Samsung Electronics and Quadro Acquisition

Assuming the 90 days horizon Samsung Electronics is expected to generate 4.16 times less return on investment than Quadro Acquisition. But when comparing it to its historical volatility, Samsung Electronics Co is 2.48 times less risky than Quadro Acquisition. It trades about 0.1 of its potential returns per unit of risk. Quadro Acquisition One is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,020  in Quadro Acquisition One on September 12, 2024 and sell it today you would earn a total of  31.00  from holding Quadro Acquisition One or generate 3.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	21.26%
Values	Daily Returns

Samsung Electronics Co  vs.  Quadro Acquisition One

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Quadro Acquisition One

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quadro Acquisition One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Quadro Acquisition is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Samsung Electronics and Quadro Acquisition

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

The idea behind Samsung Electronics Co and Quadro Acquisition One 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.