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
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Samsung is 0.68. 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 1.13 times more return on investment than Samsung Electronics. However, Bank of Georgia Group PLC is 1.13 times more volatile than Samsung Electronics Co. It trades about 0.13 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.09 per unit of risk. If you would invest 469,500 in Bank of Georgia on December 30, 2024 and sell it today you would earn a total of 86,500 from holding Bank of Georgia or generate 18.42% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Bank of Georgia vs. Samsung Electronics Co
Performance |
Timeline |
Bank of Georgia Group PLC |
Samsung Electronics |
Bank of Georgia Group PLC and Samsung Electronics Volatility Contrast
Predicted Return Density |
Returns |
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.Bank of Georgia Group PLC vs. Synthomer plc | Bank of Georgia Group PLC vs. Pets at Home | Bank of Georgia Group PLC vs. Costco Wholesale Corp | Bank of Georgia Group PLC vs. Future Metals NL |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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