Correlation Between Samsung Electronics and Daedong Steel
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Daedong Steel 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 Daedong Steel 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 Daedong Steel Co, you can compare the effects of market volatilities on Samsung Electronics and Daedong Steel 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 Daedong Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Daedong Steel.
Diversification Opportunities for Samsung Electronics and Daedong Steel
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and Daedong is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Daedong Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daedong Steel 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 Daedong Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daedong Steel has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Daedong Steel go up and down completely randomly.
Pair Corralation between Samsung Electronics and Daedong Steel
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 1.22 times more return on investment than Daedong Steel. However, Samsung Electronics is 1.22 times more volatile than Daedong Steel Co. It trades about 0.02 of its potential returns per unit of risk. Daedong Steel Co is currently generating about -0.1 per unit of risk. If you would invest 5,810,000 in Samsung Electronics Co on August 29, 2024 and sell it today you would earn a total of 20,000 from holding Samsung Electronics Co or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Daedong Steel Co
Performance |
| Timeline |
| Samsung Electronics |
| Daedong Steel |
Samsung Electronics and Daedong Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Daedong Steel
The main advantage of trading using opposite Samsung Electronics and Daedong Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Daedong Steel 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 Daedong Steel will offset losses from the drop in Daedong Steel's long position.| Samsung Electronics vs. Lotte Fine Chemical | Samsung Electronics vs. SH Energy Chemical | Samsung Electronics vs. Hansol Chemical Co | Samsung Electronics vs. Youngchang Chemical Co |
| Daedong Steel vs. Keum Kang Steel | Daedong Steel vs. Tplex Co | Daedong Steel vs. PJ Metal Co | Daedong Steel vs. Samhyun Steel Co |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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