Correlation Between Samsung Electronics and Bank of China Limited
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Bank of China Limited 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 Bank of China Limited 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 Bank of China, you can compare the effects of market volatilities on Samsung Electronics and Bank of China Limited 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 Bank of China Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Bank of China Limited.
Diversification Opportunities for Samsung Electronics and Bank of China Limited
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and Bank is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Bank of China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of China Limited 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 Bank of China Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of China Limited has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Bank of China Limited go up and down completely randomly.
Pair Corralation between Samsung Electronics and Bank of China Limited
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Bank of China Limited. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 3.52 times less risky than Bank of China Limited. The stock trades about -0.06 of its potential returns per unit of risk. The Bank of China is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Bank of China on October 20, 2024 and sell it today you would earn a total of 37.00 from holding Bank of China or generate 336.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Bank of China
Performance |
| Timeline |
| Samsung Electronics |
| Bank of China Limited |
Samsung Electronics and Bank of China Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Bank of China Limited
The main advantage of trading using opposite Samsung Electronics and Bank of China Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Bank of China Limited 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 Bank of China Limited will offset losses from the drop in Bank of China Limited's long position.| Samsung Electronics vs. United Breweries Co | Samsung Electronics vs. InterContinental Hotels Group | Samsung Electronics vs. China Resources Beer | Samsung Electronics vs. PPHE HOTEL GROUP |
| Bank of China Limited vs. JPMorgan Chase Co | Bank of China Limited vs. Bank of America | Bank of China Limited vs. Wells Fargo | Bank of China Limited vs. China Construction Bank |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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