Correlation Between Hanwha InvestmentSecuri and Samsung Biologics

Can any of the company-specific risk be diversified away by investing in both Hanwha InvestmentSecuri and Samsung Biologics 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 Hanwha InvestmentSecuri and Samsung Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hanwha InvestmentSecurities Co and Samsung Biologics Co, you can compare the effects of market volatilities on Hanwha InvestmentSecuri and Samsung Biologics 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 Hanwha InvestmentSecuri with a short position of Samsung Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha InvestmentSecuri and Samsung Biologics.

Diversification Opportunities for Hanwha InvestmentSecuri and Samsung Biologics

-0.53

Correlation Coefficient

Hanwha InvestmentSecuri  Samsung Biologics

Excellent diversification

The 3 months correlation between Hanwha and Samsung is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha InvestmentSecurities Co and Samsung Biologics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Biologics and Hanwha InvestmentSecuri 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 Hanwha InvestmentSecurities Co are associated (or correlated) with Samsung Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Biologics has no effect on the direction of Hanwha InvestmentSecuri i.e., Hanwha InvestmentSecuri and Samsung Biologics go up and down completely randomly.

Pair Corralation between Hanwha InvestmentSecuri and Samsung Biologics

Assuming the 90 days trading horizon Hanwha InvestmentSecurities Co is expected to under-perform the Samsung Biologics. In addition to that, Hanwha InvestmentSecuri is 2.73 times more volatile than Samsung Biologics Co. It trades about -0.03 of its total potential returns per unit of risk. Samsung Biologics Co is currently generating about -0.01 per unit of volatility. If you would invest  95,800,000  in Samsung Biologics Co on September 24, 2024 and sell it today you would lose (900,000) from holding Samsung Biologics Co or give up 0.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hanwha InvestmentSecurities Co  vs.  Samsung Biologics Co

Hanwha InvestmentSecuri

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hanwha InvestmentSecurities Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hanwha InvestmentSecuri may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Samsung Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsung Biologics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Samsung Biologics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hanwha InvestmentSecuri and Samsung Biologics

The main advantage of trading using opposite Hanwha InvestmentSecuri and Samsung Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha InvestmentSecuri position performs unexpectedly, Samsung Biologics 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 Biologics will offset losses from the drop in Samsung Biologics' long position.

The idea behind Hanwha InvestmentSecurities Co and Samsung Biologics Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.