Correlation Between Samsung Electronics and LC Bio

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

Diversification Opportunities for Samsung Electronics and LC Bio

0.0

Correlation Coefficient

Samsung Electronics  LC Bio

Pay attention - limited upside

The 3 months correlation between Samsung and 290650 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and LC Bio Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LC Bio 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 LC Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LC Bio has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and LC Bio go up and down completely randomly.

Pair Corralation between Samsung Electronics and LC Bio

If you would invest (100.00) in LC Bio Co on February 5, 2024 and sell it today you would earn a total of  100.00  from holding LC Bio Co or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Samsung Electronics Co  vs.  LC Bio Co

Samsung Electronics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samsung Electronics may actually be approaching a critical reversion point that can send shares even higher in June 2024.

LC Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LC Bio Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LC Bio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Samsung Electronics and LC Bio

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

The idea behind Samsung Electronics Co and LC Bio 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.