Correlation Between Samsung Electronics and Dongwon System
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Dongwon System 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 Dongwon System 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 Dongwon System, you can compare the effects of market volatilities on Samsung Electronics and Dongwon System 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 Dongwon System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Dongwon System.
Diversification Opportunities for Samsung Electronics and Dongwon System
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Samsung and Dongwon is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Dongwon System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon System 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 Dongwon System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon System has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Dongwon System go up and down completely randomly.
Pair Corralation between Samsung Electronics and Dongwon System
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.72 times more return on investment than Dongwon System. However, Samsung Electronics Co is 1.39 times less risky than Dongwon System. It trades about 0.33 of its potential returns per unit of risk. Dongwon System is currently generating about 0.11 per unit of risk. If you would invest 4,300,000 in Samsung Electronics Co on November 27, 2024 and sell it today you would earn a total of 500,000 from holding Samsung Electronics Co or generate 11.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Dongwon System
Performance |
| Timeline |
| Samsung Electronics |
| Dongwon System |
Samsung Electronics and Dongwon System Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Dongwon System
The main advantage of trading using opposite Samsung Electronics and Dongwon System positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Dongwon System 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 Dongwon System will offset losses from the drop in Dongwon System's long position.| Samsung Electronics vs. RFTech Co | Samsung Electronics vs. Jinro Distillers Co | Samsung Electronics vs. LS Materials | Samsung Electronics vs. Daejoo Electronic Materials |
| Dongwon System vs. DB Financial Investment | Dongwon System vs. KakaoBank Corp | Dongwon System vs. Shinhan Inverse Silver | Dongwon System vs. DoubleU Games 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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