Correlation Between Samsung Electronics and METAIR INVTS

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

Diversification Opportunities for Samsung Electronics and METAIR INVTS

0.8

Correlation Coefficient

Samsung Electronics  METAIR INVTS

Very poor diversification

The 3 months correlation between Samsung and METAIR is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and METAIR INVTS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METAIR INVTS LTD 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 METAIR INVTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METAIR INVTS LTD has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and METAIR INVTS go up and down completely randomly.

Pair Corralation between Samsung Electronics and METAIR INVTS

Assuming the 90 days horizon Samsung Electronics Co is expected to generate 0.77 times more return on investment than METAIR INVTS. However, Samsung Electronics Co is 1.29 times less risky than METAIR INVTS. It trades about -0.14 of its potential returns per unit of risk. METAIR INVTS LTD is currently generating about -0.12 per unit of risk. If you would invest  109,000  in Samsung Electronics Co on September 27, 2024 and sell it today you would lose (21,000) from holding Samsung Electronics Co or give up 19.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Samsung Electronics Co  vs.  METAIR INVTS LTD

Samsung Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsung Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

METAIR INVTS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METAIR INVTS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Samsung Electronics and METAIR INVTS

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

The idea behind Samsung Electronics Co and METAIR INVTS LTD 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..