Correlation Between Sewoon Medical and Samsung Biologics

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

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

Diversification Opportunities for Sewoon Medical and Samsung Biologics

0.31

Correlation Coefficient

Sewoon Medical  Samsung Biologics

Weak diversification

The 3 months correlation between Sewoon and Samsung is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sewoon Medical Co and Samsung Biologics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Biologics and Sewoon Medical 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 Sewoon Medical Co 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 Sewoon Medical i.e., Sewoon Medical and Samsung Biologics go up and down completely randomly.

Pair Corralation between Sewoon Medical and Samsung Biologics

Assuming the 90 days trading horizon Sewoon Medical is expected to generate 6.09 times less return on investment than Samsung Biologics. In addition to that, Sewoon Medical is 1.56 times more volatile than Samsung Biologics Co. It trades about 0.02 of its total potential returns per unit of risk. Samsung Biologics Co is currently generating about 0.18 per unit of volatility. If you would invest  93,800,000  in Samsung Biologics Co on December 24, 2024 and sell it today you would earn a total of  6,200,000  from holding Samsung Biologics Co or generate 6.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

Sewoon Medical Co  vs.  Samsung Biologics Co

Sewoon Medical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sewoon Medical Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sewoon Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Samsung Biologics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Biologics Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samsung Biologics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sewoon Medical and Samsung Biologics

The main advantage of trading using opposite Sewoon Medical and Samsung Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sewoon Medical 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 Sewoon Medical Co 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.