Correlation Between Samsung Electronics and PT Bumi
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and PT Bumi 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 PT Bumi 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 PT Bumi Resources, you can compare the effects of market volatilities on Samsung Electronics and PT Bumi 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 PT Bumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and PT Bumi.
Diversification Opportunities for Samsung Electronics and PT Bumi
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and PJM is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and PT Bumi Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bumi Resources 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 PT Bumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bumi Resources has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and PT Bumi go up and down completely randomly.
Pair Corralation between Samsung Electronics and PT Bumi
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the PT Bumi. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 2.85 times less risky than PT Bumi. The stock trades about -0.15 of its potential returns per unit of risk. The PT Bumi Resources is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 0.50 in PT Bumi Resources on September 3, 2024 and sell it today you would earn a total of 0.30 from holding PT Bumi Resources or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. PT Bumi Resources
Performance |
| Timeline |
| Samsung Electronics |
| PT Bumi Resources |
Samsung Electronics and PT Bumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and PT Bumi
The main advantage of trading using opposite Samsung Electronics and PT Bumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, PT Bumi 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 PT Bumi will offset losses from the drop in PT Bumi's long position.| Samsung Electronics vs. Quaker Chemical | Samsung Electronics vs. TIANDE CHEMICAL | Samsung Electronics vs. CARSALESCOM | Samsung Electronics vs. AIR PRODCHEMICALS |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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