Correlation Between Samsung Electronics and Via Optronics

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

Diversification Opportunities for Samsung Electronics and Via Optronics

-0.82

Correlation Coefficient

Samsung Electronics  Via Optronics

Pay attention - limited upside

The 3 months correlation between Samsung and Via is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Via Optronics Ag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Optronics Ag 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 Via Optronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Via Optronics Ag has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Via Optronics go up and down completely randomly.

Pair Corralation between Samsung Electronics and Via Optronics

Assuming the 90 days horizon Samsung Electronics is expected to generate 70.74 times less return on investment than Via Optronics. But when comparing it to its historical volatility, Samsung Electronics Co is 254.88 times less risky than Via Optronics. It trades about 0.1 of its potential returns per unit of risk. Via Optronics Ag is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  163.00  in Via Optronics Ag on September 2, 2024 and sell it today you would lose (148.00) from holding Via Optronics Ag or give up 90.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	78.02%
Values	Daily Returns

Samsung Electronics Co  vs.  Via Optronics Ag

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.

Via Optronics Ag

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Samsung Electronics and Via Optronics

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

The idea behind Samsung Electronics Co and Via Optronics Ag 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..