Correlation Between Samsung Electronics and First Wave

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

Diversification Opportunities for Samsung Electronics and First Wave

-0.84

Correlation Coefficient

Samsung Electronics  First Wave

Pay attention - limited upside

The 3 months correlation between Samsung and First is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and First Wave BioPharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Wave BioPharma 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 First Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Wave BioPharma has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and First Wave go up and down completely randomly.

Pair Corralation between Samsung Electronics and First Wave

If you would invest  4,033  in Samsung Electronics Co on August 31, 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	1.59%
Values	Daily Returns

Samsung Electronics Co  vs.  First Wave BioPharma

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

First Wave BioPharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Wave BioPharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, First Wave is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Samsung Electronics and First Wave

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

The idea behind Samsung Electronics Co and First Wave BioPharma 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.