Correlation Between Samsung Electronics and Graf Acquisition

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

Diversification Opportunities for Samsung Electronics and Graf Acquisition

0.64

Correlation Coefficient

Samsung Electronics  Graf Acquisition

Poor diversification

The 3 months correlation between Samsung and Graf is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Graf Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graf Acquisition Corp 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 Graf Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graf Acquisition Corp has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Graf Acquisition go up and down completely randomly.

Pair Corralation between Samsung Electronics and Graf Acquisition

Assuming the 90 days horizon Samsung Electronics is expected to generate 4.45 times less return on investment than Graf Acquisition. But when comparing it to its historical volatility, Samsung Electronics Co is 4.8 times less risky than Graf Acquisition. It trades about 0.1 of its potential returns per unit of risk. Graf Acquisition Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  995.00  in Graf Acquisition Corp on September 3, 2024 and sell it today you would earn a total of  47.00  from holding Graf Acquisition Corp or generate 4.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	30.91%
Values	Daily Returns

Samsung Electronics Co  vs.  Graf Acquisition Corp

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.

Graf Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graf Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Graf Acquisition is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Samsung Electronics and Graf Acquisition

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

The idea behind Samsung Electronics Co and Graf Acquisition Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.