Correlation Between Samsung Electronics and BE Semiconductor

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

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

Diversification Opportunities for Samsung Electronics and BE Semiconductor

0.06

Correlation Coefficient

Samsung Electronics  BE Semiconductor

Significant diversification

The 3 months correlation between Samsung and 0XVE is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and BE Semiconductor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BE Semiconductor Ind and Samsung Electronics 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 Samsung Electronics Co are associated (or correlated) with BE Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BE Semiconductor Ind has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and BE Semiconductor go up and down completely randomly.

Pair Corralation between Samsung Electronics and BE Semiconductor

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the BE Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.34 times less risky than BE Semiconductor. The stock trades about -0.18 of its potential returns per unit of risk. The BE Semiconductor Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  10,735  in BE Semiconductor Industries on September 5, 2024 and sell it today you would earn a total of  753.00  from holding BE Semiconductor Industries or generate 7.01% return on investment over 90 days.

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

Samsung Electronics Co  vs.  BE Semiconductor Industries

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BE Semiconductor Ind

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BE Semiconductor Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BE Semiconductor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Samsung Electronics and BE Semiconductor

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

The idea behind Samsung Electronics Co and BE Semiconductor Industries 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.