Correlation Between SAMG Entertainment and Daeduck Electronics

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

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

Diversification Opportunities for SAMG Entertainment and Daeduck Electronics

0.31

Correlation Coefficient

SAMG Entertainment  Daeduck Electronics

Weak diversification

The 3 months correlation between SAMG and Daeduck is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding SAMG Entertainment Co and Daeduck Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daeduck Electronics and SAMG Entertainment 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 SAMG Entertainment Co are associated (or correlated) with Daeduck Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daeduck Electronics has no effect on the direction of SAMG Entertainment i.e., SAMG Entertainment and Daeduck Electronics go up and down completely randomly.

Pair Corralation between SAMG Entertainment and Daeduck Electronics

Assuming the 90 days trading horizon SAMG Entertainment Co is expected to generate 3.81 times more return on investment than Daeduck Electronics. However, SAMG Entertainment is 3.81 times more volatile than Daeduck Electronics Co. It trades about 0.1 of its potential returns per unit of risk. Daeduck Electronics Co is currently generating about 0.18 per unit of risk. If you would invest  1,288,000  in SAMG Entertainment Co on October 25, 2024 and sell it today you would earn a total of  247,000  from holding SAMG Entertainment Co or generate 19.18% return on investment over 90 days.

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

SAMG Entertainment Co  vs.  Daeduck Electronics Co

SAMG Entertainment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SAMG Entertainment Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SAMG Entertainment sustained solid returns over the last few months and may actually be approaching a breakup point.

Daeduck Electronics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Daeduck Electronics Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daeduck Electronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SAMG Entertainment and Daeduck Electronics

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

The idea behind SAMG Entertainment Co and Daeduck Electronics 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.