Correlation Between Samsung Biologics and ABL Bio
Can any of the company-specific risk be diversified away by investing in both Samsung Biologics and ABL Bio 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 ABL Bio 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 ABL Bio, you can compare the effects of market volatilities on Samsung Biologics and ABL Bio 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 ABL Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Biologics and ABL Bio.
Diversification Opportunities for Samsung Biologics and ABL Bio
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and ABL is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Biologics Co and ABL Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABL Bio 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 ABL Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABL Bio has no effect on the direction of Samsung Biologics i.e., Samsung Biologics and ABL Bio go up and down completely randomly.
Pair Corralation between Samsung Biologics and ABL Bio
Assuming the 90 days trading horizon Samsung Biologics is expected to generate 2.22 times less return on investment than ABL Bio. But when comparing it to its historical volatility, Samsung Biologics Co is 2.29 times less risky than ABL Bio. It trades about 0.03 of its potential returns per unit of risk. ABL Bio is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,235,000 in ABL Bio on August 28, 2024 and sell it today you would earn a total of 550,000 from holding ABL Bio or generate 24.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Biologics Co vs. ABL Bio
Performance |
| Timeline |
| Samsung Biologics |
| ABL Bio |
Samsung Biologics and ABL Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Biologics and ABL Bio
The main advantage of trading using opposite Samsung Biologics and ABL Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Biologics position performs unexpectedly, ABL Bio 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 ABL Bio will offset losses from the drop in ABL Bio'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 |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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