Correlation Between Dgb Financial and Samsung Life

Can any of the company-specific risk be diversified away by investing in both Dgb Financial and Samsung Life 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 Dgb Financial and Samsung Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dgb Financial and Samsung Life Insurance, you can compare the effects of market volatilities on Dgb Financial and Samsung Life 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 Dgb Financial with a short position of Samsung Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dgb Financial and Samsung Life.

Diversification Opportunities for Dgb Financial and Samsung Life

0.52

Correlation Coefficient

Dgb Financial  Samsung Life

Very weak diversification

The 3 months correlation between Dgb and Samsung is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dgb Financial and Samsung Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life Insurance and Dgb Financial 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 Dgb Financial are associated (or correlated) with Samsung Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Life Insurance has no effect on the direction of Dgb Financial i.e., Dgb Financial and Samsung Life go up and down completely randomly.

Pair Corralation between Dgb Financial and Samsung Life

Assuming the 90 days trading horizon Dgb Financial is expected to generate 0.86 times more return on investment than Samsung Life. However, Dgb Financial is 1.16 times less risky than Samsung Life. It trades about -0.15 of its potential returns per unit of risk. Samsung Life Insurance is currently generating about -0.19 per unit of risk. If you would invest  895,000  in Dgb Financial on September 29, 2024 and sell it today you would lose (63,000) from holding Dgb Financial or give up 7.04% of portfolio value over 90 days.

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

Dgb Financial  vs.  Samsung Life Insurance

Dgb Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dgb Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dgb Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Samsung Life Insurance

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Life Insurance are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samsung Life may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dgb Financial and Samsung Life

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

The idea behind Dgb Financial and Samsung Life Insurance 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.