Correlation Between Samsung Electronics and Dong-A Steel
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Dong-A Steel 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 Dong-A Steel 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 Dong A Steel Technology, you can compare the effects of market volatilities on Samsung Electronics and Dong-A Steel 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 Dong-A Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Dong-A Steel.
Diversification Opportunities for Samsung Electronics and Dong-A Steel
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Samsung and Dong-A is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Dong A Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong A Steel 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 Dong-A Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong A Steel has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Dong-A Steel go up and down completely randomly.
Pair Corralation between Samsung Electronics and Dong-A Steel
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.58 times more return on investment than Dong-A Steel. However, Samsung Electronics Co is 1.72 times less risky than Dong-A Steel. It trades about -0.05 of its potential returns per unit of risk. Dong A Steel Technology is currently generating about -0.04 per unit of risk. If you would invest 5,761,294 in Samsung Electronics Co on September 12, 2024 and sell it today you would lose (1,241,294) from holding Samsung Electronics Co or give up 21.55% 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. Dong A Steel Technology
Performance |
| Timeline |
| Samsung Electronics |
| Dong A Steel |
Samsung Electronics and Dong-A Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Dong-A Steel
The main advantage of trading using opposite Samsung Electronics and Dong-A Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Dong-A Steel 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 Dong-A Steel will offset losses from the drop in Dong-A Steel'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 |
| Dong-A Steel vs. Samsung Electronics Co | Dong-A Steel vs. Samsung Electronics Co | Dong-A Steel vs. SK Hynix | Dong-A Steel 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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