Correlation Between Samsung Electronics and Daou Technology
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Daou Technology 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 Daou Technology 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 Daou Technology, you can compare the effects of market volatilities on Samsung Electronics and Daou Technology 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 Daou Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Daou Technology.
Diversification Opportunities for Samsung Electronics and Daou Technology
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samsung and Daou is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Daou Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Technology 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 Daou Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Technology has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Daou Technology go up and down completely randomly.
Pair Corralation between Samsung Electronics and Daou Technology
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Daou Technology. In addition to that, Samsung Electronics is 1.79 times more volatile than Daou Technology. It trades about -0.02 of its total potential returns per unit of risk. Daou Technology is currently generating about 0.02 per unit of volatility. If you would invest 1,787,000 in Daou Technology on October 20, 2024 and sell it today you would earn a total of 6,000 from holding Daou Technology or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Daou Technology
Performance |
| Timeline |
| Samsung Electronics |
| Daou Technology |
Samsung Electronics and Daou Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Daou Technology
The main advantage of trading using opposite Samsung Electronics and Daou Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Daou Technology 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 Daou Technology will offset losses from the drop in Daou Technology's long position.| Samsung Electronics vs. Seoul Electronics Telecom | Samsung Electronics vs. Cuckoo Electronics Co | Samsung Electronics vs. Innowireless Co | Samsung Electronics vs. Wireless Power Amplifier |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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