Correlation Between Samsung Electronics and Daesung Industrial

Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Daesung Industrial 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 Daesung Industrial 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 Daesung Industrial Co, you can compare the effects of market volatilities on Samsung Electronics and Daesung Industrial 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 Daesung Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Daesung Industrial.

Diversification Opportunities for Samsung Electronics and Daesung Industrial

0.31

Correlation Coefficient

Samsung Electronics  Daesung Industrial

Weak diversification

The 3 months correlation between Samsung and Daesung is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Daesung Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daesung 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 Daesung Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daesung Industrial has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Daesung Industrial go up and down completely randomly.

Pair Corralation between Samsung Electronics and Daesung Industrial

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.89 times more return on investment than Daesung Industrial. However, Samsung Electronics Co is 1.13 times less risky than Daesung Industrial. It trades about 0.13 of its potential returns per unit of risk. Daesung Industrial Co is currently generating about 0.05 per unit of risk. If you would invest  5,323,700  in Samsung Electronics Co on December 26, 2024 and sell it today you would earn a total of  656,300  from holding Samsung Electronics Co or generate 12.33% return on investment over 90 days.

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

Samsung Electronics Co  vs.  Daesung Industrial Co

Samsung Electronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samsung Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Daesung Industrial

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Samsung Electronics and Daesung Industrial

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

The idea behind Samsung Electronics Co and Daesung Industrial Co 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.