Correlation Between Samsung Electronics and Zhejiang Expressway

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

Diversification Opportunities for Samsung Electronics and Zhejiang Expressway

-0.47

Correlation Coefficient

Samsung Electronics  Zhejiang Expressway

Very good diversification

The 3 months correlation between Samsung and Zhejiang is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Zhejiang Expressway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Expressway 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 Zhejiang Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Expressway has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Zhejiang Expressway go up and down completely randomly.

Pair Corralation between Samsung Electronics and Zhejiang Expressway

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Zhejiang Expressway. In addition to that, Samsung Electronics is 2.1 times more volatile than Zhejiang Expressway Co. It trades about 0.0 of its total potential returns per unit of risk. Zhejiang Expressway Co is currently generating about 0.06 per unit of volatility. If you would invest  59.00  in Zhejiang Expressway Co on September 1, 2024 and sell it today you would earn a total of  1.00  from holding Zhejiang Expressway Co or generate 1.69% 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.  Zhejiang Expressway Co

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.

Zhejiang Expressway

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Expressway Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Zhejiang Expressway reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and Zhejiang Expressway

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

The idea behind Samsung Electronics Co and Zhejiang Expressway Co 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.