Correlation Between Nemak S and Samsung Electronics

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

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

Diversification Opportunities for Nemak S and Samsung Electronics

0.34

Correlation Coefficient

Nemak S  Samsung Electronics

Weak diversification

The 3 months correlation between Nemak and Samsung is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nemak S A and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Nemak S 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 Nemak S A 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 Nemak S i.e., Nemak S and Samsung Electronics go up and down completely randomly.

Pair Corralation between Nemak S and Samsung Electronics

Assuming the 90 days trading horizon Nemak S A is expected to generate 1.19 times more return on investment than Samsung Electronics. However, Nemak S is 1.19 times more volatile than Samsung Electronics Co. It trades about 0.28 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.07 per unit of risk. If you would invest  187.00  in Nemak S A on September 13, 2024 and sell it today you would earn a total of  35.00  from holding Nemak S A or generate 18.72% return on investment over 90 days.

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

Nemak S A  vs.  Samsung Electronics Co

Nemak S A

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nemak S A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, Nemak S may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Nemak S and Samsung Electronics

The main advantage of trading using opposite Nemak S and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nemak S 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 Nemak S A 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.