Correlation Between Samsung Biologics and TL

Can any of the company-specific risk be diversified away by investing in both Samsung Biologics and TL 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 TL 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 TL Co, you can compare the effects of market volatilities on Samsung Biologics and TL 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 TL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Biologics and TL.

Diversification Opportunities for Samsung Biologics and TL

0.75

Correlation Coefficient

Samsung Biologics  TL

Poor diversification

The 3 months correlation between Samsung and TL is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Biologics Co and TL Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TL Co 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 TL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TL Co has no effect on the direction of Samsung Biologics i.e., Samsung Biologics and TL go up and down completely randomly.

Pair Corralation between Samsung Biologics and TL

Assuming the 90 days trading horizon Samsung Biologics is expected to generate 6.24 times less return on investment than TL. But when comparing it to its historical volatility, Samsung Biologics Co is 3.22 times less risky than TL. It trades about 0.06 of its potential returns per unit of risk. TL Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  6,205,357  in TL Co on December 3, 2024 and sell it today you would earn a total of  1,364,643  from holding TL Co or generate 21.99% return on investment over 90 days.

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

Samsung Biologics Co  vs.  TL Co

Samsung Biologics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Biologics Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

TL Co

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TL Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TL sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Biologics and TL

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

The idea behind Samsung Biologics Co and TL 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..