Correlation Between Samsung Electronics and Chevron

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

Diversification Opportunities for Samsung Electronics and Chevron

-0.57

Correlation Coefficient

Samsung Electronics  Chevron

Excellent diversification

The 3 months correlation between Samsung and Chevron is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Chevron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron 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 Chevron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Chevron go up and down completely randomly.

Pair Corralation between Samsung Electronics and Chevron

Assuming the 90 days horizon Samsung Electronics Co is expected to under-perform the Chevron. In addition to that, Samsung Electronics is 1.46 times more volatile than Chevron. It trades about -0.03 of its total potential returns per unit of risk. Chevron is currently generating about 0.01 per unit of volatility. If you would invest  14,391  in Chevron on October 5, 2024 and sell it today you would lose (93.00) from holding Chevron or give up 0.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.68%
Values	Daily Returns

Samsung Electronics Co  vs.  Chevron

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

Chevron

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Chevron has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Chevron 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 Chevron

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

The idea behind Samsung Electronics Co and Chevron 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.