Correlation Between Kmw and Samsung Biologics

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

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

Diversification Opportunities for Kmw and Samsung Biologics

-0.39

Correlation Coefficient

Kmw  Samsung Biologics

Very good diversification

The 3 months correlation between Kmw and Samsung is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kmw Inc and Samsung Biologics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Biologics and Kmw 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 Kmw Inc 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 Kmw i.e., Kmw and Samsung Biologics go up and down completely randomly.

Pair Corralation between Kmw and Samsung Biologics

Assuming the 90 days trading horizon Kmw Inc is expected to generate 2.61 times more return on investment than Samsung Biologics. However, Kmw is 2.61 times more volatile than Samsung Biologics Co. It trades about 0.1 of its potential returns per unit of risk. Samsung Biologics Co is currently generating about 0.01 per unit of risk. If you would invest  710,000  in Kmw Inc on October 13, 2024 and sell it today you would earn a total of  150,000  from holding Kmw Inc or generate 21.13% return on investment over 90 days.

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

Kmw Inc  vs.  Samsung Biologics Co

Kmw Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kmw Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kmw sustained solid returns over the last few months and may actually be approaching a breakup point.

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 Kmw and Samsung Biologics

The main advantage of trading using opposite Kmw and Samsung Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kmw 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 Kmw Inc 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.