Correlation Between Samsung Electronics and Alphabet

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

Diversification Opportunities for Samsung Electronics and Alphabet

-0.85

Correlation Coefficient

Samsung Electronics  Alphabet

Pay attention - limited upside

The 3 months correlation between Samsung and Alphabet is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Alphabet Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class A 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class A has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Alphabet go up and down completely randomly.

Pair Corralation between Samsung Electronics and Alphabet

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Alphabet. In addition to that, Samsung Electronics is 1.02 times more volatile than Alphabet Class A. It trades about -0.02 of its total potential returns per unit of risk. Alphabet Class A is currently generating about 0.08 per unit of volatility. If you would invest  10,017  in Alphabet Class A on September 29, 2024 and sell it today you would earn a total of  8,489  from holding Alphabet Class A or generate 84.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Samsung Electronics Co  vs.  Alphabet Class A

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 fragile 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.

Alphabet Class A

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Class A are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and Alphabet

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

The idea behind Samsung Electronics Co and Alphabet Class A 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.