Correlation Between Bristol-Myers Squibb and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Bristol-Myers Squibb and Samsung Electronics 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 Bristol-Myers Squibb and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bristol Myers Squibb and Samsung Electronics Co, you can compare the effects of market volatilities on Bristol-Myers Squibb and Samsung Electronics 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 Bristol-Myers Squibb with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol-Myers Squibb and Samsung Electronics.
Diversification Opportunities for Bristol-Myers Squibb and Samsung Electronics
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bristol-Myers and Samsung is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bristol Myers Squibb and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Bristol-Myers Squibb 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 Bristol Myers Squibb are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Bristol-Myers Squibb i.e., Bristol-Myers Squibb and Samsung Electronics go up and down completely randomly.
Pair Corralation between Bristol-Myers Squibb and Samsung Electronics
Assuming the 90 days horizon Bristol Myers Squibb is expected to generate 52.81 times more return on investment than Samsung Electronics. However, Bristol-Myers Squibb is 52.81 times more volatile than Samsung Electronics Co. It trades about 0.05 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.11 per unit of risk. If you would invest 82,740 in Bristol Myers Squibb on August 26, 2024 and sell it today you would earn a total of 17,815 from holding Bristol Myers Squibb or generate 21.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 73.9% |
| Values | Daily Returns |
Bristol Myers Squibb vs. Samsung Electronics Co
Performance |
| Timeline |
| Bristol Myers Squibb |
| Samsung Electronics |
Bristol-Myers Squibb and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristol-Myers Squibb and Samsung Electronics
The main advantage of trading using opposite Bristol-Myers Squibb and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol-Myers Squibb position performs unexpectedly, Samsung Electronics 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.| Bristol-Myers Squibb vs. Novartis AG | Bristol-Myers Squibb vs. Bayer AG | Bristol-Myers Squibb vs. Astellas Pharma | Bristol-Myers Squibb vs. Roche Holding AG |
| Samsung Electronics vs. Copa Holdings SA | Samsung Electronics vs. United Airlines Holdings | Samsung Electronics vs. Delta Air Lines | Samsung Electronics vs. SkyWest |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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