Correlation Between Xtrackers LevDAX and Samsung Electronics

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

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

Diversification Opportunities for Xtrackers LevDAX and Samsung Electronics

-0.48

Correlation Coefficient

Xtrackers LevDAX  Samsung Electronics

Very good diversification

The 3 months correlation between Xtrackers and Samsung is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Xtrackers LevDAX 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 Xtrackers LevDAX 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 Xtrackers LevDAX i.e., Xtrackers LevDAX and Samsung Electronics go up and down completely randomly.

Pair Corralation between Xtrackers LevDAX and Samsung Electronics

Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 0.68 times more return on investment than Samsung Electronics. However, Xtrackers LevDAX is 1.47 times less risky than Samsung Electronics. It trades about 0.01 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.19 per unit of risk. If you would invest  18,474  in Xtrackers LevDAX on September 2, 2024 and sell it today you would lose (52.00) from holding Xtrackers LevDAX or give up 0.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

Xtrackers LevDAX  vs.  Samsung Electronics Co

Xtrackers LevDAX

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Xtrackers LevDAX and Samsung Electronics

The main advantage of trading using opposite Xtrackers LevDAX and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX 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 Xtrackers LevDAX 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.