Correlation Between Samick Musical and Dong A

Can any of the company-specific risk be diversified away by investing in both Samick Musical and Dong A 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 Samick Musical and Dong A into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samick Musical Instruments and Dong A Eltek, you can compare the effects of market volatilities on Samick Musical and Dong A 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 Samick Musical with a short position of Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samick Musical and Dong A.

Diversification Opportunities for Samick Musical and Dong A

-0.45

Correlation Coefficient

Samick Musical  Dong A

Very good diversification

The 3 months correlation between Samick and Dong is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Samick Musical Instruments and Dong A Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong A Eltek and Samick Musical 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 Samick Musical Instruments are associated (or correlated) with Dong A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong A Eltek has no effect on the direction of Samick Musical i.e., Samick Musical and Dong A go up and down completely randomly.

Pair Corralation between Samick Musical and Dong A

Assuming the 90 days trading horizon Samick Musical Instruments is expected to generate 0.66 times more return on investment than Dong A. However, Samick Musical Instruments is 1.52 times less risky than Dong A. It trades about 0.18 of its potential returns per unit of risk. Dong A Eltek is currently generating about -0.23 per unit of risk. If you would invest  110,900  in Samick Musical Instruments on September 26, 2024 and sell it today you would earn a total of  9,700  from holding Samick Musical Instruments or generate 8.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Samick Musical Instruments  vs.  Dong A Eltek

Samick Musical Instr

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samick Musical Instruments are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samick Musical sustained solid returns over the last few months and may actually be approaching a breakup point.

Dong A Eltek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dong A Eltek has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Samick Musical and Dong A

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

The idea behind Samick Musical Instruments and Dong A Eltek 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.