Correlation Between Samsung Electronics and AdvancedAdvT

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

Diversification Opportunities for Samsung Electronics and AdvancedAdvT

0.83

Correlation Coefficient

Samsung Electronics  AdvancedAdvT

Very poor diversification

The 3 months correlation between Samsung and AdvancedAdvT is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and AdvancedAdvT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvancedAdvT 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 AdvancedAdvT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvancedAdvT has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and AdvancedAdvT go up and down completely randomly.

Pair Corralation between Samsung Electronics and AdvancedAdvT

Assuming the 90 days trading horizon Samsung Electronics is expected to generate 1.15 times less return on investment than AdvancedAdvT. But when comparing it to its historical volatility, Samsung Electronics Co is 1.1 times less risky than AdvancedAdvT. It trades about 0.21 of its potential returns per unit of risk. AdvancedAdvT is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  15,000  in AdvancedAdvT on April 21, 2025 and sell it today you would earn a total of  3,950  from holding AdvancedAdvT or generate 26.33% return on investment over 90 days.

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

Samsung Electronics Co  vs.  AdvancedAdvT

Samsung Electronics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Samsung Electronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

AdvancedAdvT

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AdvancedAdvT are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AdvancedAdvT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and AdvancedAdvT

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

The idea behind Samsung Electronics Co and AdvancedAdvT 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.