Correlation Between Samsung Life and Dongbu Insurance
Can any of the company-specific risk be diversified away by investing in both Samsung Life and Dongbu Insurance 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 Dongbu Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Life Insurance and Dongbu Insurance Co, you can compare the effects of market volatilities on Samsung Life and Dongbu Insurance 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 Dongbu Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Life and Dongbu Insurance.
Diversification Opportunities for Samsung Life and Dongbu Insurance
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Dongbu is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Life Insurance and Dongbu Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu Insurance 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 Insurance are associated (or correlated) with Dongbu Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbu Insurance has no effect on the direction of Samsung Life i.e., Samsung Life and Dongbu Insurance go up and down completely randomly.
Pair Corralation between Samsung Life and Dongbu Insurance
Assuming the 90 days trading horizon Samsung Life Insurance is expected to under-perform the Dongbu Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Life Insurance is 1.31 times less risky than Dongbu Insurance. The stock trades about -0.55 of its potential returns per unit of risk. The Dongbu Insurance Co is currently generating about -0.31 of returns per unit of risk over similar time horizon. If you would invest 10,560,000 in Dongbu Insurance Co on October 25, 2024 and sell it today you would lose (1,400,000) from holding Dongbu Insurance Co or give up 13.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Life Insurance vs. Dongbu Insurance Co
Performance |
| Timeline |
| Samsung Life Insurance |
| Dongbu Insurance |
Samsung Life and Dongbu Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Life and Dongbu Insurance
The main advantage of trading using opposite Samsung Life and Dongbu Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Life position performs unexpectedly, Dongbu Insurance 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 Dongbu Insurance will offset losses from the drop in Dongbu Insurance's long position.| Samsung Life vs. Adaptive Plasma Technology | Samsung Life vs. BIT Computer Co | Samsung Life vs. Sangsin Energy Display | Samsung Life vs. Netmarble Games Corp |
| Dongbu Insurance vs. Korea Steel Co | Dongbu Insurance vs. Eugene Technology CoLtd | Dongbu Insurance vs. Seers Technology | Dongbu Insurance vs. Genie Music |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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