Correlation Between Daedong Steel and SAMG Entertainment
Can any of the company-specific risk be diversified away by investing in both Daedong Steel and SAMG Entertainment 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 Daedong Steel and SAMG Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daedong Steel Co and SAMG Entertainment Co, you can compare the effects of market volatilities on Daedong Steel and SAMG Entertainment 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 Daedong Steel with a short position of SAMG Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daedong Steel and SAMG Entertainment.
Diversification Opportunities for Daedong Steel and SAMG Entertainment
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daedong and SAMG is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Daedong Steel Co and SAMG Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAMG Entertainment and Daedong Steel 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 Daedong Steel Co are associated (or correlated) with SAMG Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAMG Entertainment has no effect on the direction of Daedong Steel i.e., Daedong Steel and SAMG Entertainment go up and down completely randomly.
Pair Corralation between Daedong Steel and SAMG Entertainment
Assuming the 90 days trading horizon Daedong Steel Co is expected to generate 0.98 times more return on investment than SAMG Entertainment. However, Daedong Steel Co is 1.02 times less risky than SAMG Entertainment. It trades about 0.01 of its potential returns per unit of risk. SAMG Entertainment Co is currently generating about -0.03 per unit of risk. If you would invest 355,097 in Daedong Steel Co on September 15, 2024 and sell it today you would lose (17,097) from holding Daedong Steel Co or give up 4.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daedong Steel Co vs. SAMG Entertainment Co
Performance |
| Timeline |
| Daedong Steel |
| SAMG Entertainment |
Daedong Steel and SAMG Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daedong Steel and SAMG Entertainment
The main advantage of trading using opposite Daedong Steel and SAMG Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daedong Steel position performs unexpectedly, SAMG Entertainment 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 SAMG Entertainment will offset losses from the drop in SAMG Entertainment's long position.| Daedong Steel vs. Keum Kang Steel | Daedong Steel vs. Samhyun Steel Co | Daedong Steel vs. Gyeongnam Steel Co | Daedong Steel vs. Wonil Special Steel |
| SAMG Entertainment vs. Daehan Steel | SAMG Entertainment vs. Hankook Steel Co | SAMG Entertainment vs. Daedong Steel Co | SAMG Entertainment vs. Dong A Steel Technology |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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