Correlation Between Samsung Electronics and DIO

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

Diversification Opportunities for Samsung Electronics and DIO

-0.07

Correlation Coefficient

Samsung Electronics  DIO

Good diversification

The 3 months correlation between Samsung and DIO is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and DIO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIO Corporation 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 DIO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIO Corporation has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and DIO go up and down completely randomly.

Pair Corralation between Samsung Electronics and DIO

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 1.47 times more return on investment than DIO. However, Samsung Electronics is 1.47 times more volatile than DIO Corporation. It trades about 0.12 of its potential returns per unit of risk. DIO Corporation is currently generating about 0.09 per unit of risk. If you would invest  4,420,000  in Samsung Electronics Co on December 30, 2024 and sell it today you would earn a total of  540,000  from holding Samsung Electronics Co or generate 12.22% return on investment over 90 days.

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

Samsung Electronics Co  vs.  DIO Corp.

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.

DIO Corporation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DIO Corporation are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DIO may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Samsung Electronics and DIO

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

The idea behind Samsung Electronics Co and DIO Corporation 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.