Correlation Between SIMMTECH and Samsung CT

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

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

Diversification Opportunities for SIMMTECH and Samsung CT

0.81

Correlation Coefficient

SIMMTECH  Samsung CT

Very poor diversification

The 3 months correlation between SIMMTECH and Samsung is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and Samsung CT Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung CT Corp and SIMMTECH 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 SIMMTECH Co are associated (or correlated) with Samsung CT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung CT Corp has no effect on the direction of SIMMTECH i.e., SIMMTECH and Samsung CT go up and down completely randomly.

Pair Corralation between SIMMTECH and Samsung CT

Assuming the 90 days trading horizon SIMMTECH Co is expected to under-perform the Samsung CT. In addition to that, SIMMTECH is 1.3 times more volatile than Samsung CT Corp. It trades about -0.27 of its total potential returns per unit of risk. Samsung CT Corp is currently generating about -0.17 per unit of volatility. If you would invest  14,920,000  in Samsung CT Corp on September 13, 2024 and sell it today you would lose (3,270,000) from holding Samsung CT Corp or give up 21.92% of portfolio value over 90 days.

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

SIMMTECH Co  vs.  Samsung CT Corp

SIMMTECH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMMTECH Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Samsung CT Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsung CT Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with SIMMTECH and Samsung CT

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

The idea behind SIMMTECH Co and Samsung CT Corp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.