Correlation Between Samsung Biologics and Taewoong CoLtd
Can any of the company-specific risk be diversified away by investing in both Samsung Biologics and Taewoong CoLtd 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 Taewoong CoLtd 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 Taewoong CoLtd, you can compare the effects of market volatilities on Samsung Biologics and Taewoong CoLtd 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 Taewoong CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Biologics and Taewoong CoLtd.
Diversification Opportunities for Samsung Biologics and Taewoong CoLtd
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Taewoong is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Biologics Co and Taewoong CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taewoong CoLtd 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 Taewoong CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taewoong CoLtd has no effect on the direction of Samsung Biologics i.e., Samsung Biologics and Taewoong CoLtd go up and down completely randomly.
Pair Corralation between Samsung Biologics and Taewoong CoLtd
Assuming the 90 days trading horizon Samsung Biologics Co is expected to generate 0.27 times more return on investment than Taewoong CoLtd. However, Samsung Biologics Co is 3.77 times less risky than Taewoong CoLtd. It trades about -0.22 of its potential returns per unit of risk. Taewoong CoLtd is currently generating about -0.18 per unit of risk. If you would invest 100,000,000 in Samsung Biologics Co on August 28, 2024 and sell it today you would lose (7,100,000) from holding Samsung Biologics Co or give up 7.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Biologics Co vs. Taewoong CoLtd
Performance |
| Timeline |
| Samsung Biologics |
| Taewoong CoLtd |
Samsung Biologics and Taewoong CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Biologics and Taewoong CoLtd
The main advantage of trading using opposite Samsung Biologics and Taewoong CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Biologics position performs unexpectedly, Taewoong CoLtd 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 Taewoong CoLtd will offset losses from the drop in Taewoong CoLtd's long position.| Samsung Biologics vs. Hanjin Transportation Co | Samsung Biologics vs. Daekyung Machinery Engineering | Samsung Biologics vs. Hana Technology Co | Samsung Biologics vs. Alton Sports CoLtd |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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