Correlation Between Dong-A Steel and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Dong-A Steel and Samsung Electronics 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 Dong-A Steel and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dong A Steel Technology and Samsung Electronics Co, you can compare the effects of market volatilities on Dong-A Steel and Samsung Electronics 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 Dong-A Steel with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong-A Steel and Samsung Electronics.
Diversification Opportunities for Dong-A Steel and Samsung Electronics
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dong-A and Samsung is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Dong-A 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 Dong A Steel Technology are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Dong-A Steel i.e., Dong-A Steel and Samsung Electronics go up and down completely randomly.
Pair Corralation between Dong-A Steel and Samsung Electronics
Assuming the 90 days trading horizon Dong A Steel Technology is expected to generate 1.89 times more return on investment than Samsung Electronics. However, Dong-A Steel is 1.89 times more volatile than Samsung Electronics Co. It trades about -0.02 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.05 per unit of risk. If you would invest 321,000 in Dong A Steel Technology on September 13, 2024 and sell it today you would lose (23,500) from holding Dong A Steel Technology or give up 7.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Dong A Steel Technology vs. Samsung Electronics Co
Performance |
| Timeline |
| Dong A Steel |
| Samsung Electronics |
Dong-A Steel and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong-A Steel and Samsung Electronics
The main advantage of trading using opposite Dong-A Steel and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong-A Steel position performs unexpectedly, Samsung Electronics 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 Electronics will offset losses from the drop in Samsung Electronics' long position.| Dong-A Steel vs. Samsung Electronics Co | Dong-A Steel vs. Samsung Electronics Co | Dong-A Steel vs. SK Hynix | Dong-A Steel vs. POSCO Holdings |
| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Solution Advanced Technology | Samsung Electronics vs. Busan Industrial Co | Samsung Electronics vs. Busan Ind |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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