Correlation Between Samsung Electronics and Textron

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

Diversification Opportunities for Samsung Electronics and Textron

0.85

Correlation Coefficient

Samsung Electronics  Textron

Very poor diversification

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

Pair Corralation between Samsung Electronics and Textron

Assuming the 90 days horizon Samsung Electronics is expected to generate 1.03 times less return on investment than Textron. In addition to that, Samsung Electronics is 1.41 times more volatile than Textron. It trades about 0.15 of its total potential returns per unit of risk. Textron is currently generating about 0.22 per unit of volatility. If you would invest  5,878  in Textron on April 23, 2025 and sell it today you would earn a total of  1,422  from holding Textron or generate 24.19% 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.  Textron

Samsung Electronics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Samsung Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Textron

Risk-Adjusted Performance

Solid

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

Pair Trading with Samsung Electronics and Textron

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

The idea behind Samsung Electronics Co and Textron 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 Commodity Directory module to find actively traded commodities issued by global exchanges.