Correlation Between Dong A and Dreamus
Can any of the company-specific risk be diversified away by investing in both Dong A 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 Dong A and Dreamus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dong A Steel Technology and Dreamus Company, you can compare the effects of market volatilities on Dong A 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 Dong A with a short position of Dreamus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Dreamus.
Diversification Opportunities for Dong A and Dreamus
Very good diversification
The 3 months correlation between Dong and Dreamus is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and Dreamus Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreamus Company and Dong A 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 Dong A Steel Technology 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 Dong A i.e., Dong A and Dreamus go up and down completely randomly.
Pair Corralation between Dong A and Dreamus
Assuming the 90 days trading horizon Dong A Steel Technology is expected to under-perform the Dreamus. But the stock apears to be less risky and, when comparing its historical volatility, Dong A Steel Technology is 1.38 times less risky than Dreamus. The stock trades about -0.03 of its potential returns per unit of risk. The Dreamus Company is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 287,000 in Dreamus Company on August 25, 2024 and sell it today you would lose (119,500) from holding Dreamus Company or give up 41.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Steel Technology vs. Dreamus Company
Performance |
| Timeline |
| Dong A Steel |
| Dreamus Company |
Dong A and Dreamus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Dreamus
The main advantage of trading using opposite Dong A and Dreamus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A 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.| Dong A vs. AptaBio Therapeutics | Dong A vs. Daewoo SBI SPAC | Dong A vs. Dream Security co | Dong A vs. Microfriend |
| Dreamus vs. KG Eco Technology | Dreamus vs. Dong A Steel Technology | Dreamus vs. Chin Yang Chemical | Dreamus vs. Hana Technology 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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