Correlation Between TRAVEL + and Samsung Electronics

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

By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and Samsung Electronics Co, you can compare the effects of market volatilities on TRAVEL + 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 TRAVEL + with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and Samsung Electronics.

Diversification Opportunities for TRAVEL + and Samsung Electronics

0.06

Correlation Coefficient

TRAVEL +  Samsung Electronics

Significant diversification

The 3 months correlation between TRAVEL and Samsung is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and TRAVEL + 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 TRAVEL LEISURE DL 01 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 TRAVEL + i.e., TRAVEL + and Samsung Electronics go up and down completely randomly.

Pair Corralation between TRAVEL + and Samsung Electronics

Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to under-perform the Samsung Electronics. But the stock apears to be less risky and, when comparing its historical volatility, TRAVEL LEISURE DL 01 is 1.16 times less risky than Samsung Electronics. The stock trades about -0.06 of its potential returns per unit of risk. The Samsung Electronics Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  87,800  in Samsung Electronics Co on December 30, 2024 and sell it today you would earn a total of  5,400  from holding Samsung Electronics Co or generate 6.15% return on investment over 90 days.

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

TRAVEL LEISURE DL 01  vs.  Samsung Electronics Co

TRAVEL LEISURE DL

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRAVEL LEISURE DL 01 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.

Samsung Electronics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Samsung Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with TRAVEL + and Samsung Electronics

The main advantage of trading using opposite TRAVEL + and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAVEL + 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 TRAVEL LEISURE DL 01 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.