Correlation Between Samsung Electronics and Dong Il

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

Diversification Opportunities for Samsung Electronics and Dong Il

-0.75

Correlation Coefficient

Samsung Electronics  Dong Il

Pay attention - limited upside

The 3 months correlation between Samsung and Dong is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Dong Il Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong Il Corp 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 Dong Il. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong Il Corp has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Dong Il go up and down completely randomly.

Pair Corralation between Samsung Electronics and Dong Il

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Dong Il. In addition to that, Samsung Electronics is 1.02 times more volatile than Dong Il Corp. It trades about -0.11 of its total potential returns per unit of risk. Dong Il Corp is currently generating about 0.34 per unit of volatility. If you would invest  3,670,000  in Dong Il Corp on September 27, 2024 and sell it today you would earn a total of  1,430,000  from holding Dong Il Corp or generate 38.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	75.41%
Values	Daily Returns

Samsung Electronics Co  vs.  Dong Il Corp

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 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.

Dong Il Corp

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dong Il Corp are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dong Il sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and Dong Il

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

The idea behind Samsung Electronics Co and Dong Il Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.