Correlation Between Samsung Electronics and Transcontinental

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

Diversification Opportunities for Samsung Electronics and Transcontinental

-0.44

Correlation Coefficient

Samsung Electronics  Transcontinental

Very good diversification

The 3 months correlation between Samsung and Transcontinental is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Transcontinental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcontinental 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 Transcontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcontinental has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Transcontinental go up and down completely randomly.

Pair Corralation between Samsung Electronics and Transcontinental

Assuming the 90 days horizon Samsung Electronics Co is expected to under-perform the Transcontinental. In addition to that, Samsung Electronics is 1.39 times more volatile than Transcontinental. It trades about -0.16 of its total potential returns per unit of risk. Transcontinental is currently generating about 0.06 per unit of volatility. If you would invest  1,140  in Transcontinental on September 23, 2024 and sell it today you would earn a total of  20.00  from holding Transcontinental or generate 1.75% return on investment over 90 days.

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

Samsung Electronics Co  vs.  Transcontinental

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.

Transcontinental

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transcontinental are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Transcontinental may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Samsung Electronics and Transcontinental

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

The idea behind Samsung Electronics Co and Transcontinental 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.