Correlation Between Samsung Electronics and UTime

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

Diversification Opportunities for Samsung Electronics and UTime

-0.67

Correlation Coefficient

Samsung Electronics  UTime

Excellent diversification

The 3 months correlation between Samsung and UTime is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and UTime Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTime Limited 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 UTime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTime Limited has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and UTime go up and down completely randomly.

Pair Corralation between Samsung Electronics and UTime

Assuming the 90 days horizon Samsung Electronics is expected to generate 35.94 times less return on investment than UTime. But when comparing it to its historical volatility, Samsung Electronics Co is 233.15 times less risky than UTime. It trades about 0.09 of its potential returns per unit of risk. UTime Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,313  in UTime Limited on September 21, 2024 and sell it today you would lose (2,286) from holding UTime Limited or give up 98.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Samsung Electronics Co  vs.  UTime Limited

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.

UTime Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UTime Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Samsung Electronics and UTime

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

The idea behind Samsung Electronics Co and UTime Limited 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.