Correlation Between Dream Security and Samsung Life

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

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

Diversification Opportunities for Dream Security and Samsung Life

0.61

Correlation Coefficient

Dream Security  Samsung Life

Poor diversification

The 3 months correlation between Dream and Samsung is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co 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 Dream Security 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 Dream Security co 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 Dream Security i.e., Dream Security and Samsung Life go up and down completely randomly.

Pair Corralation between Dream Security and Samsung Life

Assuming the 90 days trading horizon Dream Security co is expected to under-perform the Samsung Life. But the stock apears to be less risky and, when comparing its historical volatility, Dream Security co is 1.1 times less risky than Samsung Life. The stock trades about -0.11 of its potential returns per unit of risk. The Samsung Life Insurance is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  10,400,000  in Samsung Life Insurance on September 3, 2024 and sell it today you would earn a total of  310,000  from holding Samsung Life Insurance or generate 2.98% return on investment over 90 days.

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

Dream Security co  vs.  Samsung Life Insurance

Dream Security co

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dream Security co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dream Security may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Samsung Life Insurance

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Life Insurance are ranked lower than 4 (%) 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 Dream Security and Samsung Life

The main advantage of trading using opposite Dream Security and Samsung Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Security 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 Dream Security co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.