Correlation Between Samsung Electronics and Daehan Steel
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Daehan 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 Daehan 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 Daehan Steel, you can compare the effects of market volatilities on Samsung Electronics and Daehan 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 Daehan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Daehan Steel.
Diversification Opportunities for Samsung Electronics and Daehan Steel
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Daehan is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Daehan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daehan 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 Daehan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daehan Steel has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Daehan Steel go up and down completely randomly.
Pair Corralation between Samsung Electronics and Daehan Steel
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 4.33 times less return on investment than Daehan Steel. But when comparing it to its historical volatility, Samsung Electronics Co is 1.16 times less risky than Daehan Steel. It trades about 0.01 of its potential returns per unit of risk. Daehan Steel is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,105,413 in Daehan Steel on August 29, 2024 and sell it today you would earn a total of 421,587 from holding Daehan Steel or generate 38.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Daehan Steel
Performance |
| Timeline |
| Samsung Electronics |
| Daehan Steel |
Samsung Electronics and Daehan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Daehan Steel
The main advantage of trading using opposite Samsung Electronics and Daehan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Daehan 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 Daehan Steel will offset losses from the drop in Daehan Steel's long position.| Samsung Electronics vs. Chin Yang Chemical | Samsung Electronics vs. Dongbang Transport Logistics | Samsung Electronics vs. Shinhan Inverse Silver | Samsung Electronics vs. JC Chemical Co |
| Daehan Steel vs. Cots Technology Co | Daehan Steel vs. Ssangyong Information Communication | Daehan Steel vs. Daesung Hi Tech Co | Daehan Steel vs. BIT Computer 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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