Correlation Between Korea New and Dreamus
Can any of the company-specific risk be diversified away by investing in both Korea New and Dreamus 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 Korea New and Dreamus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea New Network and Dreamus Company, you can compare the effects of market volatilities on Korea New and Dreamus 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 Korea New with a short position of Dreamus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and Dreamus.
Diversification Opportunities for Korea New and Dreamus
Average diversification
The 3 months correlation between Korea and Dreamus is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network and Dreamus Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreamus Company and Korea New 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 Korea New Network are associated (or correlated) with Dreamus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreamus Company has no effect on the direction of Korea New i.e., Korea New and Dreamus go up and down completely randomly.
Pair Corralation between Korea New and Dreamus
Assuming the 90 days trading horizon Korea New Network is expected to generate 0.61 times more return on investment than Dreamus. However, Korea New Network is 1.64 times less risky than Dreamus. It trades about -0.05 of its potential returns per unit of risk. Dreamus Company is currently generating about -0.4 per unit of risk. If you would invest 79,900 in Korea New Network on August 30, 2024 and sell it today you would lose (2,200) from holding Korea New Network or give up 2.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea New Network vs. Dreamus Company
Performance |
| Timeline |
| Korea New Network |
| Dreamus Company |
Korea New and Dreamus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea New and Dreamus
The main advantage of trading using opposite Korea New and Dreamus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New position performs unexpectedly, Dreamus 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 Dreamus will offset losses from the drop in Dreamus' long position.| Korea New vs. GS Engineering Construction | Korea New vs. Hankook Furniture Co | Korea New vs. WooDeumGee Farm Co, | Korea New vs. Shinhan Inverse Silver |
| Dreamus vs. Stic Investments | Dreamus vs. ENERGYMACHINERY KOREA CoLtd | Dreamus vs. Sangsangin Investment Securities | Dreamus vs. SEOJEON ELECTRIC MACHINERY |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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