Correlation Between Samsung Biologics and MITECH CoLtd
Can any of the company-specific risk be diversified away by investing in both Samsung Biologics and MITECH 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 MITECH 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 MITECH CoLtd, you can compare the effects of market volatilities on Samsung Biologics and MITECH 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 MITECH CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Biologics and MITECH CoLtd.
Diversification Opportunities for Samsung Biologics and MITECH CoLtd
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and MITECH is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Biologics Co and MITECH CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MITECH 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 MITECH CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MITECH CoLtd has no effect on the direction of Samsung Biologics i.e., Samsung Biologics and MITECH CoLtd go up and down completely randomly.
Pair Corralation between Samsung Biologics and MITECH CoLtd
Assuming the 90 days trading horizon Samsung Biologics is expected to generate 1.46 times less return on investment than MITECH CoLtd. But when comparing it to its historical volatility, Samsung Biologics Co is 1.04 times less risky than MITECH CoLtd. It trades about 0.13 of its potential returns per unit of risk. MITECH CoLtd is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 788,030 in MITECH CoLtd on October 11, 2024 and sell it today you would earn a total of 47,970 from holding MITECH CoLtd or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Samsung Biologics Co vs. MITECH CoLtd
Performance |
| Timeline |
| Samsung Biologics |
| MITECH CoLtd |
Samsung Biologics and MITECH CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Biologics and MITECH CoLtd
The main advantage of trading using opposite Samsung Biologics and MITECH CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Biologics position performs unexpectedly, MITECH 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 MITECH CoLtd will offset losses from the drop in MITECH CoLtd's long position.| Samsung Biologics vs. DB Insurance Co | Samsung Biologics vs. Wireless Power Amplifier | Samsung Biologics vs. Korean Reinsurance Co | Samsung Biologics vs. Hyundai Home Shopping |
| MITECH CoLtd vs. Pureun Mutual Savings | MITECH CoLtd vs. DB Financial Investment | MITECH CoLtd vs. Daishin Information Communications | MITECH CoLtd vs. Ssangyong Information Communication |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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