Correlation Between BHI and Samsung SDI
Can any of the company-specific risk be diversified away by investing in both BHI and Samsung SDI 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 BHI and Samsung SDI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHI Co and Samsung SDI, you can compare the effects of market volatilities on BHI and Samsung SDI 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 BHI with a short position of Samsung SDI. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHI and Samsung SDI.
Diversification Opportunities for BHI and Samsung SDI
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BHI and Samsung is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding BHI Co and Samsung SDI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI and BHI 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 BHI Co are associated (or correlated) with Samsung SDI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung SDI has no effect on the direction of BHI i.e., BHI and Samsung SDI go up and down completely randomly.
Pair Corralation between BHI and Samsung SDI
Assuming the 90 days trading horizon BHI Co is expected to generate 2.14 times more return on investment than Samsung SDI. However, BHI is 2.14 times more volatile than Samsung SDI. It trades about 0.48 of its potential returns per unit of risk. Samsung SDI is currently generating about -0.11 per unit of risk. If you would invest 1,533,000 in BHI Co on November 2, 2024 and sell it today you would earn a total of 817,000 from holding BHI Co or generate 53.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHI Co vs. Samsung SDI
Performance |
| Timeline |
| BHI Co |
| Samsung SDI |
BHI and Samsung SDI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHI and Samsung SDI
The main advantage of trading using opposite BHI and Samsung SDI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHI position performs unexpectedly, Samsung SDI 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 Samsung SDI will offset losses from the drop in Samsung SDI's long position.| BHI vs. Samsung Electronics Co | BHI vs. Samsung Electronics Co | BHI vs. KB Financial Group | BHI vs. Shinhan Financial Group |
| Samsung SDI vs. Woori Technology Investment | Samsung SDI vs. Stic Investments | Samsung SDI vs. Lotte Data Communication | Samsung SDI vs. DSC Investment |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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