Correlation Between Samsung Electronics and COFCO Joycome

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

Diversification Opportunities for Samsung Electronics and COFCO Joycome

-0.45

Correlation Coefficient

Samsung Electronics  COFCO Joycome

Very good diversification

The 3 months correlation between Samsung and COFCO is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and COFCO Joycome Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COFCO Joycome Foods 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 COFCO Joycome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COFCO Joycome Foods has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and COFCO Joycome go up and down completely randomly.

Pair Corralation between Samsung Electronics and COFCO Joycome

Assuming the 90 days horizon Samsung Electronics Co is expected to generate 0.53 times more return on investment than COFCO Joycome. However, Samsung Electronics Co is 1.88 times less risky than COFCO Joycome. It trades about -0.01 of its potential returns per unit of risk. COFCO Joycome Foods is currently generating about -0.01 per unit of risk. If you would invest  104,282  in Samsung Electronics Co on September 4, 2024 and sell it today you would lose (15,682) from holding Samsung Electronics Co or give up 15.04% of portfolio value over 90 days.

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

Samsung Electronics Co  vs.  COFCO Joycome Foods

Samsung Electronics

Risk-Adjusted Performance

0 of 100

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

COFCO Joycome Foods

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COFCO Joycome Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, COFCO Joycome is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Samsung Electronics and COFCO Joycome

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

The idea behind Samsung Electronics Co and COFCO Joycome Foods 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.