Correlation Between Dreamus and Ni Steel
Can any of the company-specific risk be diversified away by investing in both Dreamus and Ni Steel 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 Dreamus and Ni Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreamus Company and Ni Steel, you can compare the effects of market volatilities on Dreamus and Ni Steel 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 Dreamus with a short position of Ni Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreamus and Ni Steel.
Diversification Opportunities for Dreamus and Ni Steel
Average diversification
The 3 months correlation between Dreamus and 008260 is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dreamus Company and Ni Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ni Steel and Dreamus 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 Dreamus Company are associated (or correlated) with Ni Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ni Steel has no effect on the direction of Dreamus i.e., Dreamus and Ni Steel go up and down completely randomly.
Pair Corralation between Dreamus and Ni Steel
Assuming the 90 days trading horizon Dreamus Company is expected to under-perform the Ni Steel. In addition to that, Dreamus is 2.04 times more volatile than Ni Steel. It trades about -0.08 of its total potential returns per unit of risk. Ni Steel is currently generating about -0.06 per unit of volatility. If you would invest 452,000 in Ni Steel on August 30, 2024 and sell it today you would lose (74,500) from holding Ni Steel or give up 16.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreamus Company vs. Ni Steel
Performance |
| Timeline |
| Dreamus Company |
| Ni Steel |
Dreamus and Ni Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreamus and Ni Steel
The main advantage of trading using opposite Dreamus and Ni Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreamus position performs unexpectedly, Ni Steel 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 Ni Steel will offset losses from the drop in Ni Steel's long position.| Dreamus vs. Stic Investments | Dreamus vs. ENERGYMACHINERY KOREA CoLtd | Dreamus vs. Sangsangin Investment Securities | Dreamus vs. SEOJEON ELECTRIC MACHINERY |
| Ni Steel vs. InnoTherapy | Ni Steel vs. Home Center Holdings | Ni Steel vs. LG Household Healthcare | Ni Steel vs. Aprogen Healthcare Games |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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