Correlation Between Samsung Life and DRGEM
Can any of the company-specific risk be diversified away by investing in both Samsung Life and DRGEM 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 Life and DRGEM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Life and DRGEM, you can compare the effects of market volatilities on Samsung Life and DRGEM 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 Life with a short position of DRGEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Life and DRGEM.
Diversification Opportunities for Samsung Life and DRGEM
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and DRGEM is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Life and DRGEM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRGEM and Samsung Life 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 Life are associated (or correlated) with DRGEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRGEM has no effect on the direction of Samsung Life i.e., Samsung Life and DRGEM go up and down completely randomly.
Pair Corralation between Samsung Life and DRGEM
Assuming the 90 days trading horizon Samsung Life is expected to generate 1.02 times more return on investment than DRGEM. However, Samsung Life is 1.02 times more volatile than DRGEM. It trades about 0.09 of its potential returns per unit of risk. DRGEM is currently generating about -0.06 per unit of risk. If you would invest 10,150,000 in Samsung Life on September 1, 2024 and sell it today you would earn a total of 560,000 from holding Samsung Life or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Samsung Life vs. DRGEM
Performance |
| Timeline |
| Samsung Life |
| DRGEM |
Samsung Life and DRGEM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Life and DRGEM
The main advantage of trading using opposite Samsung Life and DRGEM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Life position performs unexpectedly, DRGEM 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 DRGEM will offset losses from the drop in DRGEM's long position.| Samsung Life vs. Ilji Technology Co | Samsung Life vs. Daou Technology | Samsung Life vs. Polaris Office Corp | Samsung Life vs. AurosTechnology |
| DRGEM vs. Cheryong Industrial CoLtd | DRGEM vs. Hyundai Industrial Co | DRGEM vs. SM Entertainment Co | DRGEM vs. Sejong Industrial |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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