Correlation Between Copa Holdings and Samsung Electronics

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

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

Diversification Opportunities for Copa Holdings and Samsung Electronics

0.55

Correlation Coefficient

Copa Holdings  Samsung Electronics

Very weak diversification

The 3 months correlation between Copa and Samsung is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Copa Holdings 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 Copa Holdings SA 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 Copa Holdings i.e., Copa Holdings and Samsung Electronics go up and down completely randomly.

Pair Corralation between Copa Holdings and Samsung Electronics

Considering the 90-day investment horizon Copa Holdings SA is expected to generate 27.3 times more return on investment than Samsung Electronics. However, Copa Holdings is 27.3 times more volatile than Samsung Electronics Co. It trades about 0.04 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.13 per unit of risk. If you would invest  8,743  in Copa Holdings SA on September 13, 2024 and sell it today you would earn a total of  401.00  from holding Copa Holdings SA or generate 4.59% return on investment over 90 days.

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

Copa Holdings SA  vs.  Samsung Electronics Co

Copa Holdings SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Copa Holdings SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Copa Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Samsung Electronics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Samsung Electronics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Copa Holdings and Samsung Electronics

The main advantage of trading using opposite Copa Holdings and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings 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 Copa Holdings SA 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.