Correlation Between Samsung Electronics and BH

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

Diversification Opportunities for Samsung Electronics and BH

-0.11

Correlation Coefficient

Samsung Electronics  BH

Good diversification

The 3 months correlation between Samsung and BH is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and BH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Co 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 BH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Co has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and BH go up and down completely randomly.

Pair Corralation between Samsung Electronics and BH

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.72 times more return on investment than BH. However, Samsung Electronics Co is 1.4 times less risky than BH. It trades about 0.0 of its potential returns per unit of risk. BH Co is currently generating about 0.0 per unit of risk. If you would invest  4,498,029  in Samsung Electronics Co on December 4, 2024 and sell it today you would lose (28,029) from holding Samsung Electronics Co or give up 0.62% of portfolio value over 90 days.

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

Samsung Electronics Co  vs.  BH Co

Samsung Electronics

Risk-Adjusted Performance

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.

BH Co

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Samsung Electronics and BH

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

The idea behind Samsung Electronics Co and BH 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.