Correlation Between Samsung Electronics and GeneBioTech
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and GeneBioTech 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 GeneBioTech 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 GeneBioTech Co, you can compare the effects of market volatilities on Samsung Electronics and GeneBioTech 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 GeneBioTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and GeneBioTech.
Diversification Opportunities for Samsung Electronics and GeneBioTech
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and GeneBioTech is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and GeneBioTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeneBioTech 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 GeneBioTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeneBioTech has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and GeneBioTech go up and down completely randomly.
Pair Corralation between Samsung Electronics and GeneBioTech
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the GeneBioTech. In addition to that, Samsung Electronics is 1.32 times more volatile than GeneBioTech Co. It trades about -0.04 of its total potential returns per unit of risk. GeneBioTech Co is currently generating about -0.05 per unit of volatility. If you would invest 423,000 in GeneBioTech Co on September 21, 2024 and sell it today you would lose (82,000) from holding GeneBioTech Co or give up 19.39% 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. GeneBioTech Co
Performance |
| Timeline |
| Samsung Electronics |
| GeneBioTech |
Samsung Electronics and GeneBioTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and GeneBioTech
The main advantage of trading using opposite Samsung Electronics and GeneBioTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, GeneBioTech 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 GeneBioTech will offset losses from the drop in GeneBioTech's long position.| Samsung Electronics vs. Cube Entertainment | Samsung Electronics vs. Dreamus Company | Samsung Electronics vs. LG Energy Solution | Samsung Electronics vs. Dongwon System |
| GeneBioTech vs. Hyundai Engineering Plastics | GeneBioTech vs. Dongbu Insurance Co | GeneBioTech vs. Ssangyong Materials Corp | GeneBioTech vs. RF Materials Co |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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