Correlation Between Samsung Life and BHI
Can any of the company-specific risk be diversified away by investing in both Samsung Life and BHI 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 Life and BHI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Life and BHI Co, you can compare the effects of market volatilities on Samsung Life and BHI 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 Life with a short position of BHI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Life and BHI.
Diversification Opportunities for Samsung Life and BHI
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Samsung and BHI is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Life and BHI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHI Co and Samsung Life 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 Life are associated (or correlated) with BHI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHI Co has no effect on the direction of Samsung Life i.e., Samsung Life and BHI go up and down completely randomly.
Pair Corralation between Samsung Life and BHI
Assuming the 90 days trading horizon Samsung Life is expected to generate 18.08 times less return on investment than BHI. But when comparing it to its historical volatility, Samsung Life is 1.91 times less risky than BHI. It trades about 0.04 of its potential returns per unit of risk. BHI Co is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 1,594,000 in BHI Co on November 7, 2024 and sell it today you would earn a total of 601,000 from holding BHI Co or generate 37.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Samsung Life vs. BHI Co
Performance |
| Timeline |
| Samsung Life |
| BHI Co |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Samsung Life and BHI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Life and BHI
The main advantage of trading using opposite Samsung Life and BHI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Life position performs unexpectedly, BHI 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 BHI will offset losses from the drop in BHI's long position.| Samsung Life vs. Aekyung Petrochemical Co | Samsung Life vs. TK Chemical | Samsung Life vs. Namhae Chemical | Samsung Life vs. Dongbang Transport Logistics |
| BHI vs. Lotte Data Communication | BHI vs. Innowireless Co | BHI vs. Daejung Chemicals Metals | BHI vs. Dongil Metal 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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