Correlation Between Samsung Electronics and Monks Investment

Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Monks Investment 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 Monks Investment 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 Monks Investment Trust, you can compare the effects of market volatilities on Samsung Electronics and Monks Investment 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 Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Monks Investment.

Diversification Opportunities for Samsung Electronics and Monks Investment

-0.8

Correlation Coefficient

Samsung Electronics  Monks Investment

Pay attention - limited upside

The 3 months correlation between Samsung and Monks is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Monks Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monks Investment Trust 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 Monks Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monks Investment Trust has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Monks Investment go up and down completely randomly.

Pair Corralation between Samsung Electronics and Monks Investment

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Monks Investment. In addition to that, Samsung Electronics is 2.36 times more volatile than Monks Investment Trust. It trades about -0.18 of its total potential returns per unit of risk. Monks Investment Trust is currently generating about 0.16 per unit of volatility. If you would invest  115,200  in Monks Investment Trust on August 31, 2024 and sell it today you would earn a total of  11,200  from holding Monks Investment Trust or generate 9.72% return on investment over 90 days.

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

Samsung Electronics Co  vs.  Monks Investment Trust

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 December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Monks Investment Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monks Investment Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Monks Investment may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Samsung Electronics and Monks Investment

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

The idea behind Samsung Electronics Co and Monks Investment Trust 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.