Correlation Between Celltrion Pharm and Samsung Biologics

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

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

Diversification Opportunities for Celltrion Pharm and Samsung Biologics

0.71

Correlation Coefficient

Celltrion Pharm  Samsung Biologics

Poor diversification

The 3 months correlation between Celltrion and Samsung is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Celltrion Pharm and Samsung Biologics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Biologics and Celltrion Pharm 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 Celltrion Pharm 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 Celltrion Pharm i.e., Celltrion Pharm and Samsung Biologics go up and down completely randomly.

Pair Corralation between Celltrion Pharm and Samsung Biologics

Assuming the 90 days trading horizon Celltrion Pharm is expected to under-perform the Samsung Biologics. In addition to that, Celltrion Pharm is 2.14 times more volatile than Samsung Biologics Co. It trades about -0.05 of its total potential returns per unit of risk. Samsung Biologics Co is currently generating about -0.05 per unit of volatility. If you would invest  100,000,000  in Samsung Biologics Co on September 25, 2024 and sell it today you would lose (5,100,000) from holding Samsung Biologics Co or give up 5.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Celltrion Pharm  vs.  Samsung Biologics Co

Celltrion Pharm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celltrion Pharm has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains 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 Celltrion Pharm and Samsung Biologics

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

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.