Correlation Between Samsung Electronics and SPORT LISBOA

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

Diversification Opportunities for Samsung Electronics and SPORT LISBOA

0.15

Correlation Coefficient

Samsung Electronics  SPORT LISBOA

Average diversification

The 3 months correlation between Samsung and SPORT is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and SPORT LISBOA E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORT LISBOA E 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 SPORT LISBOA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORT LISBOA E has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and SPORT LISBOA go up and down completely randomly.

Pair Corralation between Samsung Electronics and SPORT LISBOA

Assuming the 90 days horizon Samsung Electronics Co is expected to generate 0.64 times more return on investment than SPORT LISBOA. However, Samsung Electronics Co is 1.56 times less risky than SPORT LISBOA. It trades about 0.0 of its potential returns per unit of risk. SPORT LISBOA E is currently generating about -0.04 per unit of risk. If you would invest  94,200  in Samsung Electronics Co on November 28, 2024 and sell it today you would lose (1,400) from holding Samsung Electronics Co or give up 1.49% of portfolio value over 90 days.

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

Samsung Electronics Co  vs.  SPORT LISBOA E

Samsung Electronics

Risk-Adjusted Performance

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 nearly stable basic indicators, Samsung Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SPORT LISBOA E

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPORT LISBOA E has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Samsung Electronics and SPORT LISBOA

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

The idea behind Samsung Electronics Co and SPORT LISBOA E 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.