Correlation Between POSCO M and Dream Security
Can any of the company-specific risk be diversified away by investing in both POSCO M and Dream Security 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 POSCO M and Dream Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POSCO M TECH Co and Dream Security co, you can compare the effects of market volatilities on POSCO M and Dream Security 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 POSCO M with a short position of Dream Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSCO M and Dream Security.
Diversification Opportunities for POSCO M and Dream Security
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between POSCO and Dream is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding POSCO M TECH Co and Dream Security co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Security co and POSCO M 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 POSCO M TECH Co are associated (or correlated) with Dream Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Security co has no effect on the direction of POSCO M i.e., POSCO M and Dream Security go up and down completely randomly.
Pair Corralation between POSCO M and Dream Security
Assuming the 90 days trading horizon POSCO M TECH Co is expected to under-perform the Dream Security. In addition to that, POSCO M is 1.34 times more volatile than Dream Security co. It trades about -0.08 of its total potential returns per unit of risk. Dream Security co is currently generating about -0.03 per unit of volatility. If you would invest 381,500 in Dream Security co on August 27, 2024 and sell it today you would lose (66,000) from holding Dream Security co or give up 17.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
POSCO M TECH Co vs. Dream Security co
Performance |
| Timeline |
| POSCO M TECH |
| Dream Security co |
POSCO M and Dream Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POSCO M and Dream Security
The main advantage of trading using opposite POSCO M and Dream Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSCO M position performs unexpectedly, Dream Security 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 Dream Security will offset losses from the drop in Dream Security's long position.| POSCO M vs. LG Chemicals | POSCO M vs. Lotte Chemical Corp | POSCO M vs. Hyundai Steel | POSCO M vs. Seah Steel Corp |
| Dream Security vs. Intellian Technologies | Dream Security vs. DONGKUK TED METAL | Dream Security vs. Automobile Pc | Dream Security vs. POSCO M TECH Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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