Correlation Between Samsung Electronics and PT Bank

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

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

Diversification Opportunities for Samsung Electronics and PT Bank

-0.06

Correlation Coefficient

Samsung Electronics  PT Bank

Good diversification

The 3 months correlation between Samsung and BYRA is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and PT Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Rakyat and Samsung Electronics 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 Electronics Co are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Rakyat has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and PT Bank go up and down completely randomly.

Pair Corralation between Samsung Electronics and PT Bank

Assuming the 90 days horizon Samsung Electronics Co is expected to generate 0.3 times more return on investment than PT Bank. However, Samsung Electronics Co is 3.33 times less risky than PT Bank. It trades about 0.06 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about -0.02 per unit of risk. If you would invest  88,000  in Samsung Electronics Co on December 21, 2024 and sell it today you would earn a total of  6,000  from holding Samsung Electronics Co or generate 6.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Samsung Electronics Co  vs.  PT Bank Rakyat

Samsung Electronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Samsung Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PT Bank Rakyat

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Samsung Electronics and PT Bank

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

The idea behind Samsung Electronics Co and PT Bank Rakyat 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.