Correlation Between Samsung Electronics and DIGITAL CHOSUN
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and DIGITAL CHOSUN 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 DIGITAL CHOSUN 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 DIGITAL CHOSUN, you can compare the effects of market volatilities on Samsung Electronics and DIGITAL CHOSUN 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 DIGITAL CHOSUN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and DIGITAL CHOSUN.
Diversification Opportunities for Samsung Electronics and DIGITAL CHOSUN
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and DIGITAL is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and DIGITAL CHOSUN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIGITAL CHOSUN 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 DIGITAL CHOSUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIGITAL CHOSUN has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and DIGITAL CHOSUN go up and down completely randomly.
Pair Corralation between Samsung Electronics and DIGITAL CHOSUN
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the DIGITAL CHOSUN. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.59 times less risky than DIGITAL CHOSUN. The stock trades about -0.2 of its potential returns per unit of risk. The DIGITAL CHOSUN is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 171,800 in DIGITAL CHOSUN on September 27, 2024 and sell it today you would lose (400.00) from holding DIGITAL CHOSUN or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. DIGITAL CHOSUN
Performance |
| Timeline |
| Samsung Electronics |
| DIGITAL CHOSUN |
Samsung Electronics and DIGITAL CHOSUN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and DIGITAL CHOSUN
The main advantage of trading using opposite Samsung Electronics and DIGITAL CHOSUN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, DIGITAL CHOSUN 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 DIGITAL CHOSUN will offset losses from the drop in DIGITAL CHOSUN's long position.| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Zinus Inc | Samsung Electronics vs. Humasis Co | Samsung Electronics vs. JYP Entertainment |
| DIGITAL CHOSUN vs. Homecast CoLtd | DIGITAL CHOSUN vs. CJ Seafood Corp | DIGITAL CHOSUN vs. Hyundai Home Shopping | DIGITAL CHOSUN vs. Myoung Shin Industrial |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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