Correlation Between Samsung Electronics and Heerim Architects

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

Diversification Opportunities for Samsung Electronics and Heerim Architects

-0.53

Correlation Coefficient

Samsung Electronics  Heerim Architects

Excellent diversification

The 3 months correlation between Samsung and Heerim is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Heerim Architects Planners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heerim Architects 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 Heerim Architects. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heerim Architects has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Heerim Architects go up and down completely randomly.

Pair Corralation between Samsung Electronics and Heerim Architects

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 1.05 times more return on investment than Heerim Architects. However, Samsung Electronics is 1.05 times more volatile than Heerim Architects Planners. It trades about -0.13 of its potential returns per unit of risk. Heerim Architects Planners is currently generating about -0.14 per unit of risk. If you would invest  6,800,000  in Samsung Electronics Co on February 1, 2024 and sell it today you would lose (280,000) from holding Samsung Electronics Co or give up 4.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Samsung Electronics Co  vs.  Heerim Architects Planners

Samsung Electronics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samsung Electronics may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Heerim Architects

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heerim Architects Planners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Heerim Architects is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Samsung Electronics and Heerim Architects

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

The idea behind Samsung Electronics Co and Heerim Architects Planners 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.

Check out your portfolio center.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.