Correlation Between Samsung Electronics and Sony Group

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

Diversification Opportunities for Samsung Electronics and Sony Group

0.69

Correlation Coefficient

Samsung Electronics  Sony Group

Poor diversification

The 3 months correlation between Samsung and Sony is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Sony Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Group Corp 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 Sony Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Group Corp has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Sony Group go up and down completely randomly.

Pair Corralation between Samsung Electronics and Sony Group

Assuming the 90 days horizon Samsung Electronics Co is expected to under-perform the Sony Group. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.0 times less risky than Sony Group. The stock trades about -0.12 of its potential returns per unit of risk. The Sony Group Corp is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  7,800  in Sony Group Corp on February 15, 2024 and sell it today you would lose (342.00) from holding Sony Group Corp or give up 4.38% of portfolio value over 90 days.

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

Samsung Electronics Co  vs.  Sony Group Corp

Samsung Electronics

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Samsung Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sony Group Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Group Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sony Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and Sony Group

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

The idea behind Samsung Electronics Co and Sony Group Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.