Correlation Between Samsung Electronics and Newmont

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

Diversification Opportunities for Samsung Electronics and Newmont

0.77

Correlation Coefficient

Samsung Electronics  Newmont

Poor diversification

The 3 months correlation between Samsung and Newmont is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Newmont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont 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 Newmont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Newmont go up and down completely randomly.

Pair Corralation between Samsung Electronics and Newmont

Assuming the 90 days horizon Samsung Electronics Co is expected to generate 0.87 times more return on investment than Newmont. However, Samsung Electronics Co is 1.15 times less risky than Newmont. It trades about -0.11 of its potential returns per unit of risk. Newmont is currently generating about -0.17 per unit of risk. If you would invest  105,886  in Samsung Electronics Co on September 22, 2024 and sell it today you would lose (17,886) from holding Samsung Electronics Co or give up 16.89% of portfolio value over 90 days.

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

Samsung Electronics Co  vs.  Newmont

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 unsteady 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.

Newmont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newmont 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.

Pair Trading with Samsung Electronics and Newmont

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

The idea behind Samsung Electronics Co and Newmont 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.