Correlation Between Samsung Electronics and DIO
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and DIO 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 DIO 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 DIO Corporation, you can compare the effects of market volatilities on Samsung Electronics and DIO 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 DIO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and DIO.
Diversification Opportunities for Samsung Electronics and DIO
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Samsung and DIO is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and DIO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIO Corporation 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 DIO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIO Corporation has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and DIO go up and down completely randomly.
Pair Corralation between Samsung Electronics and DIO
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 1.04 times less return on investment than DIO. In addition to that, Samsung Electronics is 1.3 times more volatile than DIO Corporation. It trades about 0.04 of its total potential returns per unit of risk. DIO Corporation is currently generating about 0.05 per unit of volatility. If you would invest 1,589,000 in DIO Corporation on September 13, 2024 and sell it today you would earn a total of 33,000 from holding DIO Corporation or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. DIO Corp.
Performance |
| Timeline |
| Samsung Electronics |
| DIO Corporation |
Samsung Electronics and DIO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and DIO
The main advantage of trading using opposite Samsung Electronics and DIO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, DIO 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 DIO will offset losses from the drop in DIO'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 |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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