Correlation Between Samsung Electronics and Bohae Brewery

Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Bohae Brewery 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 Bohae Brewery 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 Bohae Brewery, you can compare the effects of market volatilities on Samsung Electronics and Bohae Brewery 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 Bohae Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Bohae Brewery.

Diversification Opportunities for Samsung Electronics and Bohae Brewery

-0.25

Correlation Coefficient

Samsung Electronics  Bohae Brewery

Very good diversification

The 3 months correlation between Samsung and Bohae is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Bohae Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bohae Brewery 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 Bohae Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bohae Brewery has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Bohae Brewery go up and down completely randomly.

Pair Corralation between Samsung Electronics and Bohae Brewery

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Bohae Brewery. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 2.57 times less risky than Bohae Brewery. The stock trades about -0.01 of its potential returns per unit of risk. The Bohae Brewery is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  42,000  in Bohae Brewery on October 9, 2024 and sell it today you would earn a total of  8,700  from holding Bohae Brewery or generate 20.71% 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.  Bohae Brewery

Samsung Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bohae Brewery

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bohae Brewery are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bohae Brewery sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and Bohae Brewery

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

The idea behind Samsung Electronics Co and Bohae Brewery 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.