Correlation Between Bank of Georgia Group PLC and Samsung Electronics

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

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

Diversification Opportunities for Bank of Georgia Group PLC and Samsung Electronics

0.45

Correlation Coefficient

Bank of Georgia Group PLC  Samsung Electronics

Very weak diversification

The 3 months correlation between Bank and Samsung is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Georgia and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Bank of Georgia Group PLC 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 Bank of Georgia are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Bank of Georgia Group PLC i.e., Bank of Georgia Group PLC and Samsung Electronics go up and down completely randomly.

Pair Corralation between Bank of Georgia Group PLC and Samsung Electronics

Assuming the 90 days trading horizon Bank of Georgia is expected to generate 0.99 times more return on investment than Samsung Electronics. However, Bank of Georgia is 1.01 times less risky than Samsung Electronics. It trades about 0.13 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.02 per unit of risk. If you would invest  466,500  in Bank of Georgia on December 3, 2024 and sell it today you would earn a total of  66,500  from holding Bank of Georgia or generate 14.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Bank of Georgia  vs.  Samsung Electronics Co

Bank of Georgia Group PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Georgia are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bank of Georgia Group PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Samsung Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samsung Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Samsung Electronics is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bank of Georgia Group PLC and Samsung Electronics

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

The idea behind Bank of Georgia and Samsung Electronics 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 Global Correlations module to find global opportunities by holding instruments from different markets.