Correlation Between Samsung Electronics and Dentium

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

Diversification Opportunities for Samsung Electronics and Dentium

0.48

Correlation Coefficient

Samsung Electronics  Dentium

Very weak diversification

The 3 months correlation between Samsung and Dentium is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Dentium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dentium 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 Dentium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dentium has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Dentium go up and down completely randomly.

Pair Corralation between Samsung Electronics and Dentium

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.7 times more return on investment than Dentium. However, Samsung Electronics Co is 1.44 times less risky than Dentium. It trades about -0.01 of its potential returns per unit of risk. Dentium is currently generating about -0.06 per unit of risk. If you would invest  5,590,000  in Samsung Electronics Co on October 25, 2024 and sell it today you would lose (160,000) from holding Samsung Electronics Co or give up 2.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Samsung Electronics Co  vs.  Dentium

Samsung Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsung Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Samsung Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dentium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dentium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Samsung Electronics and Dentium

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

The idea behind Samsung Electronics Co and Dentium 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.