Correlation Between Samsung Biologics and Dentium

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

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

Diversification Opportunities for Samsung Biologics and Dentium

0.72

Correlation Coefficient

Samsung Biologics  Dentium

Poor diversification

The 3 months correlation between Samsung and Dentium is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Biologics Co and Dentium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dentium and Samsung Biologics 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 Biologics Co are associated (or correlated) with Dentium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dentium has no effect on the direction of Samsung Biologics i.e., Samsung Biologics and Dentium go up and down completely randomly.

Pair Corralation between Samsung Biologics and Dentium

Assuming the 90 days trading horizon Samsung Biologics is expected to generate 6.45 times less return on investment than Dentium. But when comparing it to its historical volatility, Samsung Biologics Co is 1.65 times less risky than Dentium. It trades about 0.1 of its potential returns per unit of risk. Dentium is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  5,540,000  in Dentium on October 10, 2024 and sell it today you would earn a total of  1,360,000  from holding Dentium or generate 24.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Samsung Biologics Co  vs.  Dentium

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.

Dentium

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Samsung Biologics and Dentium

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

The idea behind Samsung Biologics Co and Dentium 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.