Correlation Between Samsung Electronics and Rollins

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

Diversification Opportunities for Samsung Electronics and Rollins

-0.19

Correlation Coefficient

Samsung Electronics  Rollins

Good diversification

The 3 months correlation between Samsung and Rollins is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Rollins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rollins 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 Rollins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rollins has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Rollins go up and down completely randomly.

Pair Corralation between Samsung Electronics and Rollins

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Rollins. In addition to that, Samsung Electronics is 1.21 times more volatile than Rollins. It trades about -0.02 of its total potential returns per unit of risk. Rollins is currently generating about 0.05 per unit of volatility. If you would invest  3,184  in Rollins on October 11, 2024 and sell it today you would earn a total of  1,229  from holding Rollins or generate 38.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Samsung Electronics Co  vs.  Rollins

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

Rollins

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rollins has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Rollins is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Samsung Electronics and Rollins

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

The idea behind Samsung Electronics Co and Rollins 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.