Correlation Between Samsung Electronics and BYON
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and BYON 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 BYON 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 BYON Co, you can compare the effects of market volatilities on Samsung Electronics and BYON 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 BYON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and BYON.
Diversification Opportunities for Samsung Electronics and BYON
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and BYON is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and BYON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYON 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 BYON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYON has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and BYON go up and down completely randomly.
Pair Corralation between Samsung Electronics and BYON
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 1.68 times less return on investment than BYON. But when comparing it to its historical volatility, Samsung Electronics Co is 2.64 times less risky than BYON. It trades about 0.01 of its potential returns per unit of risk. BYON Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 115,500 in BYON Co on August 29, 2024 and sell it today you would lose (31,500) from holding BYON Co or give up 27.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. BYON Co
Performance |
| Timeline |
| Samsung Electronics |
| BYON |
Samsung Electronics and BYON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and BYON
The main advantage of trading using opposite Samsung Electronics and BYON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, BYON 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 BYON will offset losses from the drop in BYON's long position.| Samsung Electronics vs. Chin Yang Chemical | Samsung Electronics vs. Dongbang Transport Logistics | Samsung Electronics vs. Shinhan Inverse Silver | Samsung Electronics vs. JC Chemical Co |
| BYON vs. Derkwoo Electronics Co | BYON vs. Digital Power Communications | BYON vs. Daejoo Electronic Materials | BYON vs. LG Electronics |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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