Correlation Between Bosung Power and Samsung SDI

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

By analyzing existing cross correlation between Bosung Power Technology and Samsung SDI, you can compare the effects of market volatilities on Bosung Power and Samsung SDI 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 Bosung Power with a short position of Samsung SDI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bosung Power and Samsung SDI.

Diversification Opportunities for Bosung Power and Samsung SDI

-0.42

Correlation Coefficient

Bosung Power  Samsung SDI

Very good diversification

The 3 months correlation between Bosung and Samsung is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bosung Power Technology and Samsung SDI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI and Bosung Power 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 Bosung Power Technology are associated (or correlated) with Samsung SDI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung SDI has no effect on the direction of Bosung Power i.e., Bosung Power and Samsung SDI go up and down completely randomly.

Pair Corralation between Bosung Power and Samsung SDI

Assuming the 90 days trading horizon Bosung Power Technology is expected to generate 0.71 times more return on investment than Samsung SDI. However, Bosung Power Technology is 1.42 times less risky than Samsung SDI. It trades about 0.05 of its potential returns per unit of risk. Samsung SDI is currently generating about -0.11 per unit of risk. If you would invest  258,500  in Bosung Power Technology on December 25, 2024 and sell it today you would earn a total of  12,500  from holding Bosung Power Technology or generate 4.84% return on investment over 90 days.

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

Bosung Power Technology  vs.  Samsung SDI

Bosung Power Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bosung Power Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bosung Power may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Samsung SDI

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samsung SDI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bosung Power and Samsung SDI

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

The idea behind Bosung Power Technology and Samsung SDI 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.