Correlation Between Samsung Electronics and Biogen
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Biogen 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 Electronics and Biogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Biogen Inc, you can compare the effects of market volatilities on Samsung Electronics and Biogen 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 Electronics with a short position of Biogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Biogen.
Diversification Opportunities for Samsung Electronics and Biogen
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and Biogen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc and Samsung Electronics 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 Electronics Co are associated (or correlated) with Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Biogen go up and down completely randomly.
Pair Corralation between Samsung Electronics and Biogen
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 1.67 times more return on investment than Biogen. However, Samsung Electronics is 1.67 times more volatile than Biogen Inc. It trades about -0.07 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.2 per unit of risk. If you would invest 2,032,878 in Samsung Electronics Co on September 12, 2024 and sell it today you would lose (87,128) from holding Samsung Electronics Co or give up 4.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Biogen Inc
Performance |
| Timeline |
| Samsung Electronics |
| Biogen Inc |
Samsung Electronics and Biogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Biogen
The main advantage of trading using opposite Samsung Electronics and Biogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Biogen 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 Biogen will offset losses from the drop in Biogen's long position.| Samsung Electronics vs. Hoteles City Express | Samsung Electronics vs. United States Steel | Samsung Electronics vs. Grupo Sports World | Samsung Electronics vs. Monster Beverage Corp |
| Biogen vs. New Oriental Education | Biogen vs. GMxico Transportes SAB | Biogen vs. McEwen Mining | Biogen vs. Genworth Financial |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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