Correlation Between Samsung Electronics and Doosan Fuel
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Doosan Fuel 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 Doosan Fuel 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 Doosan Fuel Cell, you can compare the effects of market volatilities on Samsung Electronics and Doosan Fuel 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 Doosan Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Doosan Fuel.
Diversification Opportunities for Samsung Electronics and Doosan Fuel
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Doosan is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Doosan Fuel Cell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan Fuel Cell 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 Doosan Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan Fuel Cell has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Doosan Fuel go up and down completely randomly.
Pair Corralation between Samsung Electronics and Doosan Fuel
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.56 times more return on investment than Doosan Fuel. However, Samsung Electronics Co is 1.78 times less risky than Doosan Fuel. It trades about 0.0 of its potential returns per unit of risk. Doosan Fuel Cell is currently generating about -0.05 per unit of risk. If you would invest 5,193,133 in Samsung Electronics Co on August 26, 2024 and sell it today you would lose (383,133) from holding Samsung Electronics Co or give up 7.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Doosan Fuel Cell
Performance |
| Timeline |
| Samsung Electronics |
| Doosan Fuel Cell |
Samsung Electronics and Doosan Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Doosan Fuel
The main advantage of trading using opposite Samsung Electronics and Doosan Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Doosan Fuel 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 Doosan Fuel will offset losses from the drop in Doosan Fuel's long position.| Samsung Electronics vs. Mobileleader CoLtd | Samsung Electronics vs. Innowireless Co | Samsung Electronics vs. Daechang Steel Co | Samsung Electronics vs. Hanil Iron Steel |
| Doosan Fuel vs. LS Electric | Doosan Fuel vs. Hanjinkal | Doosan Fuel vs. Busan Industrial Co | Doosan Fuel 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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