Correlation Between Samsung Special and Daewon Media

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

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

Diversification Opportunities for Samsung Special and Daewon Media

-0.24

Correlation Coefficient

Samsung Special  Daewon Media

Very good diversification

The 3 months correlation between Samsung and Daewon is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Special Purpose and Daewon Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewon Media and Samsung Special 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 Special Purpose are associated (or correlated) with Daewon Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewon Media has no effect on the direction of Samsung Special i.e., Samsung Special and Daewon Media go up and down completely randomly.

Pair Corralation between Samsung Special and Daewon Media

Assuming the 90 days trading horizon Samsung Special is expected to generate 20.5 times less return on investment than Daewon Media. But when comparing it to its historical volatility, Samsung Special Purpose is 10.56 times less risky than Daewon Media. It trades about 0.1 of its potential returns per unit of risk. Daewon Media Co is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  707,676  in Daewon Media Co on December 2, 2024 and sell it today you would earn a total of  199,324  from holding Daewon Media Co or generate 28.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	74.58%
Values	Daily Returns

Samsung Special Purpose  vs.  Daewon Media Co

Samsung Special Purpose

Risk-Adjusted Performance

OK

Over the last 90 days Samsung Special Purpose has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Samsung Special is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Daewon Media

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Daewon Media Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daewon Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Special and Daewon Media

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

The idea behind Samsung Special Purpose and Daewon 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.

Check out your portfolio center.

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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.