Correlation Between Digital Power and Samsung Life
Can any of the company-specific risk be diversified away by investing in both Digital Power and Samsung Life 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 Digital Power and Samsung Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Power Communications and Samsung Life, you can compare the effects of market volatilities on Digital Power and Samsung Life 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 Digital Power with a short position of Samsung Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Power and Samsung Life.
Diversification Opportunities for Digital Power and Samsung Life
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Digital and Samsung is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Digital Power Communications and Samsung Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life and Digital Power 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 Digital Power Communications are associated (or correlated) with Samsung Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Life has no effect on the direction of Digital Power i.e., Digital Power and Samsung Life go up and down completely randomly.
Pair Corralation between Digital Power and Samsung Life
Assuming the 90 days trading horizon Digital Power Communications is expected to generate 1.07 times more return on investment than Samsung Life. However, Digital Power is 1.07 times more volatile than Samsung Life. It trades about 0.05 of its potential returns per unit of risk. Samsung Life is currently generating about 0.05 per unit of risk. If you would invest 546,798 in Digital Power Communications on September 2, 2024 and sell it today you would earn a total of 281,202 from holding Digital Power Communications or generate 51.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Power Communications vs. Samsung Life
Performance |
| Timeline |
| Digital Power Commun |
| Samsung Life |
Digital Power and Samsung Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Power and Samsung Life
The main advantage of trading using opposite Digital Power and Samsung Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Power position performs unexpectedly, Samsung Life 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 Samsung Life will offset losses from the drop in Samsung Life's long position.| Digital Power vs. AptaBio Therapeutics | Digital Power vs. Daewoo SBI SPAC | Digital Power vs. Dream Security co | Digital Power vs. Microfriend |
| Samsung Life vs. HJ ShipBuilding Construction | Samsung Life vs. Woori Technology Investment | Samsung Life vs. SEOJEON ELECTRIC MACHINERY | Samsung Life vs. SV Investment |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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