Correlation Between Prestige Biologics and Samsung Biologics

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

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

Diversification Opportunities for Prestige Biologics and Samsung Biologics

0.66

Correlation Coefficient

Prestige Biologics  Samsung Biologics

Poor diversification

The 3 months correlation between Prestige and Samsung is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Prestige Biologics 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 Prestige 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 Prestige Biologics 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 Prestige Biologics i.e., Prestige Biologics and Samsung Biologics go up and down completely randomly.

Pair Corralation between Prestige Biologics and Samsung Biologics

Assuming the 90 days trading horizon Prestige Biologics is expected to generate 1.05 times less return on investment than Samsung Biologics. In addition to that, Prestige Biologics is 2.11 times more volatile than Samsung Biologics Co. It trades about 0.04 of its total potential returns per unit of risk. Samsung Biologics Co is currently generating about 0.08 per unit of volatility. If you would invest  72,200,000  in Samsung Biologics Co on September 19, 2024 and sell it today you would earn a total of  25,200,000  from holding Samsung Biologics Co or generate 34.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.58%
Values	Daily Returns

Prestige Biologics Co  vs.  Samsung Biologics Co

Prestige Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prestige Biologics Co 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 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 Prestige Biologics and Samsung Biologics

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

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.