Correlation Between Samsung Electronics and Cresco Labs

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

Diversification Opportunities for Samsung Electronics and Cresco Labs

0.79

Correlation Coefficient

Samsung Electronics  Cresco Labs

Poor diversification

The 3 months correlation between Samsung and Cresco is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Cresco Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresco Labs 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 Cresco Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresco Labs has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Cresco Labs go up and down completely randomly.

Pair Corralation between Samsung Electronics and Cresco Labs

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.78 times more return on investment than Cresco Labs. However, Samsung Electronics Co is 1.28 times less risky than Cresco Labs. It trades about -0.37 of its potential returns per unit of risk. Cresco Labs is currently generating about -0.38 per unit of risk. If you would invest  84,200  in Samsung Electronics Co on September 24, 2024 and sell it today you would lose (11,800) from holding Samsung Electronics Co or give up 14.01% of portfolio value over 90 days.

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

Samsung Electronics Co  vs.  Cresco Labs

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 conflicting 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.

Cresco Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cresco Labs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Samsung Electronics and Cresco Labs

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

The idea behind Samsung Electronics Co and Cresco Labs 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.