Correlation Between Samsung Electronics and Walkme

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

Diversification Opportunities for Samsung Electronics and Walkme

0.6

Correlation Coefficient

Samsung Electronics  Walkme

Poor diversification

The 3 months correlation between Samsung and Walkme is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Walkme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walkme 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 Walkme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walkme has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Walkme go up and down completely randomly.

Pair Corralation between Samsung Electronics and Walkme

Assuming the 90 days horizon Samsung Electronics is expected to generate 20.89 times less return on investment than Walkme. But when comparing it to its historical volatility, Samsung Electronics Co is 55.42 times less risky than Walkme. It trades about 0.09 of its potential returns per unit of risk. Walkme is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,070  in Walkme on September 26, 2024 and sell it today you would earn a total of  325.00  from holding Walkme or generate 30.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	85.69%
Values	Daily Returns

Samsung Electronics Co  vs.  Walkme

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

Walkme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Walkme has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Walkme is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Samsung Electronics and Walkme

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

The idea behind Samsung Electronics Co and Walkme 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.