Correlation Between Samsung Electronics and EFFECTOR Therapeutics

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

Diversification Opportunities for Samsung Electronics and EFFECTOR Therapeutics

-0.83

Correlation Coefficient

Samsung Electronics  EFFECTOR Therapeutics

Pay attention - limited upside

The 3 months correlation between Samsung and EFFECTOR is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and EFFECTOR Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EFFECTOR 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 EFFECTOR Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EFFECTOR Therapeutics has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and EFFECTOR Therapeutics go up and down completely randomly.

Pair Corralation between Samsung Electronics and EFFECTOR Therapeutics

If you would invest  4,033  in Samsung Electronics Co on September 3, 2024 and sell it today you would earn a total of  27.00  from holding Samsung Electronics Co or generate 0.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Samsung Electronics Co  vs.  EFFECTOR 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.

EFFECTOR Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EFFECTOR Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, EFFECTOR Therapeutics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Samsung Electronics and EFFECTOR Therapeutics

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

The idea behind Samsung Electronics Co and EFFECTOR 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.