Correlation Between Samsung Biologics and Iljin Materials
Can any of the company-specific risk be diversified away by investing in both Samsung Biologics and Iljin Materials 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 Biologics and Iljin Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Biologics Co and Iljin Materials Co, you can compare the effects of market volatilities on Samsung Biologics and Iljin Materials 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 Biologics with a short position of Iljin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Biologics and Iljin Materials.
Diversification Opportunities for Samsung Biologics and Iljin Materials
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Iljin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Biologics Co and Iljin Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Materials and Samsung Biologics 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 Biologics Co are associated (or correlated) with Iljin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Materials has no effect on the direction of Samsung Biologics i.e., Samsung Biologics and Iljin Materials go up and down completely randomly.
Pair Corralation between Samsung Biologics and Iljin Materials
Assuming the 90 days trading horizon Samsung Biologics Co is expected to generate 0.38 times more return on investment than Iljin Materials. However, Samsung Biologics Co is 2.62 times less risky than Iljin Materials. It trades about 0.23 of its potential returns per unit of risk. Iljin Materials Co is currently generating about -0.03 per unit of risk. If you would invest 91,600,000 in Samsung Biologics Co on September 18, 2024 and sell it today you would earn a total of 8,300,000 from holding Samsung Biologics Co or generate 9.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Samsung Biologics Co vs. Iljin Materials Co
Performance |
| Timeline |
| Samsung Biologics |
| Iljin Materials |
Samsung Biologics and Iljin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Biologics and Iljin Materials
The main advantage of trading using opposite Samsung Biologics and Iljin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Biologics position performs unexpectedly, Iljin Materials 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 Iljin Materials will offset losses from the drop in Iljin Materials' long position.| Samsung Biologics vs. SK Bioscience Co | Samsung Biologics vs. ABL Bio | Samsung Biologics vs. Green Cross Lab | Samsung Biologics vs. MedPacto |
| Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. LG Energy Solution | Iljin Materials vs. SK Hynix |
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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