Correlation Between Samsung Electronics and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Dow Jones 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 Electronics and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Dow Jones Industrial, you can compare the effects of market volatilities on Samsung Electronics and Dow Jones 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 Electronics with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Dow Jones.
Diversification Opportunities for Samsung Electronics and Dow Jones
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Dow is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Samsung Electronics 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 Electronics Co are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Dow Jones go up and down completely randomly.
Pair Corralation between Samsung Electronics and Dow Jones
Assuming the 90 days horizon Samsung Electronics is expected to generate 8.59 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Samsung Electronics Co is 10.66 times less risky than Dow Jones. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,359,634 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 1,070,017 from holding Dow Jones Industrial or generate 31.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Dow Jones Industrial
Performance |
| Timeline |
Samsung Electronics and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Samsung Electronics Co
Pair trading matchups for Samsung Electronics
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Samsung Electronics and Dow Jones
The main advantage of trading using opposite Samsung Electronics and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Samsung Electronics vs. Universal Electronics | Samsung Electronics vs. Vizio Holding Corp | Samsung Electronics vs. VOXX International | Samsung Electronics vs. Sony Group Corp |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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