Correlation Between Samsung Fire and Daishin Information

Can any of the company-specific risk be diversified away by investing in both Samsung Fire and Daishin Information 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 Fire and Daishin Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samsung Fire Marine and Daishin Information Communications, you can compare the effects of market volatilities on Samsung Fire and Daishin Information 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 Fire with a short position of Daishin Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Fire and Daishin Information.

Diversification Opportunities for Samsung Fire and Daishin Information

0.08

Correlation Coefficient

Samsung Fire  Daishin Information

Significant diversification

The 3 months correlation between Samsung and Daishin is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Fire Marine and Daishin Information Communicat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daishin Information and Samsung Fire 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 Fire Marine are associated (or correlated) with Daishin Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daishin Information has no effect on the direction of Samsung Fire i.e., Samsung Fire and Daishin Information go up and down completely randomly.

Pair Corralation between Samsung Fire and Daishin Information

Assuming the 90 days trading horizon Samsung Fire Marine is expected to under-perform the Daishin Information. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Fire Marine is 4.79 times less risky than Daishin Information. The stock trades about -0.04 of its potential returns per unit of risk. The Daishin Information Communications is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  99,800  in Daishin Information Communications on October 11, 2024 and sell it today you would earn a total of  6,700  from holding Daishin Information Communications or generate 6.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Samsung Fire Marine  vs.  Daishin Information Communicat

Samsung Fire Marine

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Fire Marine are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samsung Fire may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Daishin Information

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Daishin Information Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daishin Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Fire and Daishin Information

The main advantage of trading using opposite Samsung Fire and Daishin Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Fire position performs unexpectedly, Daishin Information 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 Daishin Information will offset losses from the drop in Daishin Information's long position.

The idea behind Samsung Fire Marine and Daishin Information Communications pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.