Correlation Between Samsung Electronics and Crescita Therapeutics

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

Diversification Opportunities for Samsung Electronics and Crescita Therapeutics

1.0

Correlation Coefficient

Samsung Electronics  Crescita Therapeutics

No risk reduction

The 3 months correlation between Samsung and Crescita is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Crescita Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescita Therapeutics 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 Crescita Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescita Therapeutics has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Crescita Therapeutics go up and down completely randomly.

Pair Corralation between Samsung Electronics and Crescita Therapeutics

Assuming the 90 days horizon Samsung Electronics is expected to generate 1462.46 times less return on investment than Crescita Therapeutics. But when comparing it to its historical volatility, Samsung Electronics Co is 1481.99 times less risky than Crescita Therapeutics. It trades about 0.13 of its potential returns per unit of risk. Crescita Therapeutics is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2.10  in Crescita Therapeutics on September 3, 2024 and sell it today you would earn a total of  42.90  from holding Crescita Therapeutics or generate 2042.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

Samsung Electronics Co  vs.  Crescita Therapeutics

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.

Crescita Therapeutics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crescita Therapeutics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Crescita Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and Crescita Therapeutics

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

The idea behind Samsung Electronics Co and Crescita Therapeutics 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.