Correlation Between Samwha Electronics and DC Media

Can any of the company-specific risk be diversified away by investing in both Samwha Electronics and DC Media 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 Samwha Electronics and DC Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samwha Electronics Co and DC Media Co, you can compare the effects of market volatilities on Samwha Electronics and DC Media 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 Samwha Electronics with a short position of DC Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samwha Electronics and DC Media.

Diversification Opportunities for Samwha Electronics and DC Media

0.59

Correlation Coefficient

Samwha Electronics  DC Media

Very weak diversification

The 3 months correlation between Samwha and 263720 is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Samwha Electronics Co and DC Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DC Media and Samwha 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 Samwha Electronics Co are associated (or correlated) with DC Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DC Media has no effect on the direction of Samwha Electronics i.e., Samwha Electronics and DC Media go up and down completely randomly.

Pair Corralation between Samwha Electronics and DC Media

Assuming the 90 days trading horizon Samwha Electronics is expected to generate 1.11 times less return on investment than DC Media. But when comparing it to its historical volatility, Samwha Electronics Co is 1.1 times less risky than DC Media. It trades about 0.39 of its potential returns per unit of risk. DC Media Co is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  1,700,000  in DC Media Co on October 9, 2024 and sell it today you would earn a total of  505,000  from holding DC Media Co or generate 29.71% return on investment over 90 days.

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

Samwha Electronics Co  vs.  DC Media Co

Samwha Electronics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samwha Electronics Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samwha Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

DC Media

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DC Media Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DC Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samwha Electronics and DC Media

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

The idea behind Samwha Electronics Co and DC Media 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.