Correlation Between Samsung Electronics and Vestas Wind

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

Diversification Opportunities for Samsung Electronics and Vestas Wind

0.13

Correlation Coefficient

Samsung Electronics  Vestas Wind

Average diversification

The 3 months correlation between Samsung and Vestas is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Vestas Wind Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestas Wind Systems 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 Vestas Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestas Wind Systems has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Vestas Wind go up and down completely randomly.

Pair Corralation between Samsung Electronics and Vestas Wind

If you would invest  1,362  in Vestas Wind Systems on December 30, 2024 and sell it today you would earn a total of  52.00  from holding Vestas Wind Systems or generate 3.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Samsung Electronics Co  vs.  Vestas Wind Systems

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.

Vestas Wind Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vestas Wind Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vestas Wind may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Samsung Electronics and Vestas Wind

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

The idea behind Samsung Electronics Co and Vestas Wind Systems 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.