Correlation Between Virgin Wines and Samsung Electronics

Can any of the company-specific risk be diversified away by investing in both Virgin Wines and Samsung Electronics 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 Virgin Wines and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Virgin Wines UK and Samsung Electronics Co, you can compare the effects of market volatilities on Virgin Wines and Samsung Electronics 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 Virgin Wines with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Wines and Samsung Electronics.

Diversification Opportunities for Virgin Wines and Samsung Electronics

0.91

Correlation Coefficient

Virgin Wines  Samsung Electronics

Almost no diversification

The 3 months correlation between Virgin and Samsung is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Wines UK and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Virgin Wines 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 Virgin Wines UK are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Virgin Wines i.e., Virgin Wines and Samsung Electronics go up and down completely randomly.

Pair Corralation between Virgin Wines and Samsung Electronics

Assuming the 90 days trading horizon Virgin Wines UK is expected to generate 0.54 times more return on investment than Samsung Electronics. However, Virgin Wines UK is 1.86 times less risky than Samsung Electronics. It trades about -0.29 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.2 per unit of risk. If you would invest  4,300  in Virgin Wines UK on September 4, 2024 and sell it today you would lose (850.00) from holding Virgin Wines UK or give up 19.77% of portfolio value over 90 days.

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

Virgin Wines UK  vs.  Samsung Electronics Co

Virgin Wines UK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virgin Wines UK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Virgin Wines and Samsung Electronics

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

The idea behind Virgin Wines UK and Samsung Electronics Co 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.