Correlation Between Samsung Electronics and Dongwon Metal
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Dongwon Metal 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 Metal 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 Metal Co, you can compare the effects of market volatilities on Samsung Electronics and Dongwon Metal 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 Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Dongwon Metal.
Diversification Opportunities for Samsung Electronics and Dongwon Metal
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and Dongwon is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Dongwon Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon Metal 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 Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon Metal has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Dongwon Metal go up and down completely randomly.
Pair Corralation between Samsung Electronics and Dongwon Metal
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.68 times more return on investment than Dongwon Metal. However, Samsung Electronics Co is 1.46 times less risky than Dongwon Metal. It trades about -0.02 of its potential returns per unit of risk. Dongwon Metal Co is currently generating about -0.08 per unit of risk. If you would invest 5,267,350 in Samsung Electronics Co on September 12, 2024 and sell it today you would lose (747,350) from holding Samsung Electronics Co or give up 14.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Dongwon Metal Co
Performance |
| Timeline |
| Samsung Electronics |
| Dongwon Metal |
Samsung Electronics and Dongwon Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Dongwon Metal
The main advantage of trading using opposite Samsung Electronics and Dongwon Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Dongwon Metal 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 Metal will offset losses from the drop in Dongwon Metal's long position.| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Solution Advanced Technology | Samsung Electronics vs. Busan Industrial Co | Samsung Electronics vs. Busan Ind |
| Dongwon Metal vs. Samsung Electronics Co | Dongwon Metal vs. Samsung Electronics Co | Dongwon Metal vs. SK Hynix | Dongwon Metal vs. POSCO Holdings |
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 CEOs Directory module to screen CEOs from public companies around the world.
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