Correlation Between Samsung Electronics and TITAN MACHINERY

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

Diversification Opportunities for Samsung Electronics and TITAN MACHINERY

-0.8

Correlation Coefficient

Samsung Electronics  TITAN MACHINERY

Pay attention - limited upside

The 3 months correlation between Samsung and TITAN is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and TITAN MACHINERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TITAN MACHINERY 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 TITAN MACHINERY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TITAN MACHINERY has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and TITAN MACHINERY go up and down completely randomly.

Pair Corralation between Samsung Electronics and TITAN MACHINERY

Assuming the 90 days horizon Samsung Electronics Co is expected to generate 0.64 times more return on investment than TITAN MACHINERY. However, Samsung Electronics Co is 1.55 times less risky than TITAN MACHINERY. It trades about -0.02 of its potential returns per unit of risk. TITAN MACHINERY is currently generating about -0.04 per unit of risk. If you would invest  110,073  in Samsung Electronics Co on September 12, 2024 and sell it today you would lose (21,273) from holding Samsung Electronics Co or give up 19.33% of portfolio value over 90 days.

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

Samsung Electronics Co  vs.  TITAN MACHINERY

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.

TITAN MACHINERY

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TITAN MACHINERY are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TITAN MACHINERY exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and TITAN MACHINERY

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

The idea behind Samsung Electronics Co and TITAN MACHINERY 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.