Correlation Between Dow Jones and Samsung Asset
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Samsung Asset 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 Dow Jones and Samsung Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Samsung Asset Management, you can compare the effects of market volatilities on Dow Jones and Samsung Asset 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 Dow Jones with a short position of Samsung Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Samsung Asset.
Diversification Opportunities for Dow Jones and Samsung Asset
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Samsung is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Samsung Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Asset Management and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Samsung Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Asset Management has no effect on the direction of Dow Jones i.e., Dow Jones and Samsung Asset go up and down completely randomly.
Pair Corralation between Dow Jones and Samsung Asset
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.26 times less return on investment than Samsung Asset. But when comparing it to its historical volatility, Dow Jones Industrial is 1.72 times less risky than Samsung Asset. It trades about 0.13 of its potential returns per unit of risk. Samsung Asset Management is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,282,312 in Samsung Asset Management on September 3, 2024 and sell it today you would earn a total of 359,688 from holding Samsung Asset Management or generate 28.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.76% |
| Values | Daily Returns |
Dow Jones Industrial vs. Samsung Asset Management
Performance |
| Timeline |
Dow Jones and Samsung Asset Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Samsung Asset Management
Pair trading matchups for Samsung Asset
Pair Trading with Dow Jones and Samsung Asset
The main advantage of trading using opposite Dow Jones and Samsung Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Samsung Asset 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 Asset will offset losses from the drop in Samsung Asset's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Samsung Asset vs. Samsung KODEX IT | Samsung Asset vs. Samsung KODEX Machinary | Samsung Asset vs. Samsung KODEX Samsung | Samsung Asset vs. Samsung KODEX Copper |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |