Correlation Between Samsung Electronics and Worldline

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

Diversification Opportunities for Samsung Electronics and Worldline

-0.57

Correlation Coefficient

Samsung Electronics  Worldline

Excellent diversification

The 3 months correlation between Samsung and Worldline is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Worldline SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldline SA 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 Worldline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldline SA has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Worldline go up and down completely randomly.

Pair Corralation between Samsung Electronics and Worldline

Assuming the 90 days horizon Samsung Electronics Co is expected to generate 0.02 times more return on investment than Worldline. However, Samsung Electronics Co is 55.78 times less risky than Worldline. It trades about 0.13 of its potential returns per unit of risk. Worldline SA is currently generating about 0.0 per unit of risk. If you would invest  4,033  in Samsung Electronics Co on September 24, 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Samsung Electronics Co  vs.  Worldline SA

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.

Worldline SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worldline SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Worldline is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Samsung Electronics and Worldline

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

The idea behind Samsung Electronics Co and Worldline SA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.