Correlation Between Barunson Entertainment and Samsung Fire

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

By analyzing existing cross correlation between Barunson Entertainment Arts and Samsung Fire Marine, you can compare the effects of market volatilities on Barunson Entertainment and Samsung Fire 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 Barunson Entertainment with a short position of Samsung Fire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barunson Entertainment and Samsung Fire.

Diversification Opportunities for Barunson Entertainment and Samsung Fire

-0.4

Correlation Coefficient

Barunson Entertainment  Samsung Fire

Very good diversification

The 3 months correlation between Barunson and Samsung is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Barunson Entertainment Arts and Samsung Fire Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Fire Marine and Barunson Entertainment 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 Barunson Entertainment Arts are associated (or correlated) with Samsung Fire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Fire Marine has no effect on the direction of Barunson Entertainment i.e., Barunson Entertainment and Samsung Fire go up and down completely randomly.

Pair Corralation between Barunson Entertainment and Samsung Fire

Assuming the 90 days trading horizon Barunson Entertainment Arts is expected to under-perform the Samsung Fire. But the stock apears to be less risky and, when comparing its historical volatility, Barunson Entertainment Arts is 1.18 times less risky than Samsung Fire. The stock trades about -0.1 of its potential returns per unit of risk. The Samsung Fire Marine is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  35,750,000  in Samsung Fire Marine on September 13, 2024 and sell it today you would earn a total of  1,300,000  from holding Samsung Fire Marine or generate 3.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Barunson Entertainment Arts  vs.  Samsung Fire Marine

Barunson Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barunson Entertainment Arts 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Samsung Fire Marine

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Barunson Entertainment and Samsung Fire

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

The idea behind Barunson Entertainment Arts and Samsung Fire Marine 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.