Correlation Between Samsung SDI and Daewoo Electronic
Can any of the company-specific risk be diversified away by investing in both Samsung SDI and Daewoo Electronic 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 SDI and Daewoo Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung SDI and Daewoo Electronic Components, you can compare the effects of market volatilities on Samsung SDI and Daewoo Electronic 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 SDI with a short position of Daewoo Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung SDI and Daewoo Electronic.
Diversification Opportunities for Samsung SDI and Daewoo Electronic
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Daewoo is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Samsung SDI and Daewoo Electronic Components in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo Electronic and Samsung SDI 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 SDI are associated (or correlated) with Daewoo Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo Electronic has no effect on the direction of Samsung SDI i.e., Samsung SDI and Daewoo Electronic go up and down completely randomly.
Pair Corralation between Samsung SDI and Daewoo Electronic
Assuming the 90 days trading horizon Samsung SDI is expected to under-perform the Daewoo Electronic. In addition to that, Samsung SDI is 1.19 times more volatile than Daewoo Electronic Components. It trades about -0.06 of its total potential returns per unit of risk. Daewoo Electronic Components is currently generating about -0.02 per unit of volatility. If you would invest 148,000 in Daewoo Electronic Components on October 12, 2024 and sell it today you would lose (46,300) from holding Daewoo Electronic Components or give up 31.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung SDI vs. Daewoo Electronic Components
Performance |
| Timeline |
| Samsung SDI |
| Daewoo Electronic |
Samsung SDI and Daewoo Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung SDI and Daewoo Electronic
The main advantage of trading using opposite Samsung SDI and Daewoo Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung SDI position performs unexpectedly, Daewoo Electronic 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 Daewoo Electronic will offset losses from the drop in Daewoo Electronic's long position.| Samsung SDI vs. KMH Hitech Co | Samsung SDI vs. GemVaxKAEL CoLtd | Samsung SDI vs. Bosung Power Technology | Samsung SDI vs. Busan Industrial Co |
| Daewoo Electronic vs. Hwangkum Steel Technology | Daewoo Electronic vs. SEOWONINTECHCoLtd | Daewoo Electronic vs. LS Materials | Daewoo Electronic vs. Sungchang Autotech Co |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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