Correlation Between Dong A and Samsung Life
Can any of the company-specific risk be diversified away by investing in both Dong A 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 Dong A and Samsung Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dong A Eltek and Samsung Life, you can compare the effects of market volatilities on Dong A 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 Dong A with a short position of Samsung Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Samsung Life.
Diversification Opportunities for Dong A and Samsung Life
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dong and Samsung is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Eltek and Samsung Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life and Dong A 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 Eltek 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 Dong A i.e., Dong A and Samsung Life go up and down completely randomly.
Pair Corralation between Dong A and Samsung Life
Assuming the 90 days trading horizon Dong A Eltek is expected to under-perform the Samsung Life. But the stock apears to be less risky and, when comparing its historical volatility, Dong A Eltek is 1.41 times less risky than Samsung Life. The stock trades about -0.02 of its potential returns per unit of risk. The Samsung Life is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,250,000 in Samsung Life on August 29, 2024 and sell it today you would earn a total of 210,000 from holding Samsung Life or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dong A Eltek vs. Samsung Life
Performance |
| Timeline |
| Dong A Eltek |
| Samsung Life |
Dong A and Samsung Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Samsung Life
The main advantage of trading using opposite Dong A and Samsung Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A 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.| Dong A vs. Okins Electronics Co | Dong A vs. Songwon Industrial Co | Dong A vs. Namhwa Industrial Co | Dong A vs. Busan Industrial Co |
| Samsung Life vs. Wireless Power Amplifier | Samsung Life vs. LB Investment | Samsung Life vs. LG Chemicals | Samsung Life vs. Korea Investment Holdings |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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