Correlation Between Samsung Electronics and Alaska Air

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

Diversification Opportunities for Samsung Electronics and Alaska Air

-0.85

Correlation Coefficient

Samsung Electronics  Alaska Air

Pay attention - limited upside

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

Pair Corralation between Samsung Electronics and Alaska Air

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Alaska Air. In addition to that, Samsung Electronics is 1.15 times more volatile than Alaska Air Group. It trades about -0.11 of its total potential returns per unit of risk. Alaska Air Group is currently generating about 0.31 per unit of volatility. If you would invest  3,251  in Alaska Air Group on August 31, 2024 and sell it today you would earn a total of  1,751  from holding Alaska Air Group or generate 53.86% return on investment over 90 days.

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

Samsung Electronics Co  vs.  Alaska Air Group

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 December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Alaska Air Group

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Alaska Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and Alaska Air

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

The idea behind Samsung Electronics Co and Alaska Air Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..