Correlation Between Samsung Biologics and Gyeongnam Steel
Can any of the company-specific risk be diversified away by investing in both Samsung Biologics and Gyeongnam Steel 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 Gyeongnam Steel 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 Gyeongnam Steel Co, you can compare the effects of market volatilities on Samsung Biologics and Gyeongnam Steel 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 Gyeongnam Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Biologics and Gyeongnam Steel.
Diversification Opportunities for Samsung Biologics and Gyeongnam Steel
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and Gyeongnam is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Biologics Co and Gyeongnam Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyeongnam Steel 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 Gyeongnam Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gyeongnam Steel has no effect on the direction of Samsung Biologics i.e., Samsung Biologics and Gyeongnam Steel go up and down completely randomly.
Pair Corralation between Samsung Biologics and Gyeongnam Steel
Assuming the 90 days trading horizon Samsung Biologics Co is expected to under-perform the Gyeongnam Steel. In addition to that, Samsung Biologics is 1.24 times more volatile than Gyeongnam Steel Co. It trades about -0.05 of its total potential returns per unit of risk. Gyeongnam Steel Co is currently generating about 0.09 per unit of volatility. If you would invest 281,000 in Gyeongnam Steel Co on September 3, 2024 and sell it today you would earn a total of 8,500 from holding Gyeongnam Steel Co or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Biologics Co vs. Gyeongnam Steel Co
Performance |
| Timeline |
| Samsung Biologics |
| Gyeongnam Steel |
Samsung Biologics and Gyeongnam Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Biologics and Gyeongnam Steel
The main advantage of trading using opposite Samsung Biologics and Gyeongnam Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Biologics position performs unexpectedly, Gyeongnam Steel 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 Gyeongnam Steel will offset losses from the drop in Gyeongnam Steel's long position.| Samsung Biologics vs. SK Bioscience Co | Samsung Biologics vs. ABL Bio | Samsung Biologics vs. MedPacto | Samsung Biologics vs. Prestige Biologics Co |
| Gyeongnam Steel vs. Korea Investment Holdings | Gyeongnam Steel vs. NH Investment Securities | Gyeongnam Steel vs. Golden Bridge Investment | Gyeongnam Steel 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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