Correlation Between Dreamus and Dong A
Can any of the company-specific risk be diversified away by investing in both Dreamus and Dong A 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 Dong A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreamus Company and Dong A Eltek, you can compare the effects of market volatilities on Dreamus and Dong A 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 Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreamus and Dong A.
Diversification Opportunities for Dreamus and Dong A
Very good diversification
The 3 months correlation between Dreamus and Dong is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dreamus Company and Dong A Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong A Eltek 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 Dong A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong A Eltek has no effect on the direction of Dreamus i.e., Dreamus and Dong A go up and down completely randomly.
Pair Corralation between Dreamus and Dong A
Assuming the 90 days trading horizon Dreamus Company is expected to under-perform the Dong A. But the stock apears to be less risky and, when comparing its historical volatility, Dreamus Company is 1.06 times less risky than Dong A. The stock trades about -0.03 of its potential returns per unit of risk. The Dong A Eltek is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 394,950 in Dong A Eltek on November 19, 2024 and sell it today you would lose (65,450) from holding Dong A Eltek or give up 16.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreamus Company vs. Dong A Eltek
Performance |
| Timeline |
| Dreamus Company |
| Dong A Eltek |
Dreamus and Dong A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreamus and Dong A
The main advantage of trading using opposite Dreamus and Dong A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreamus position performs unexpectedly, Dong A 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 Dong A will offset losses from the drop in Dong A's long position.| Dreamus vs. BIT Computer Co | Dreamus vs. KCC Engineering Construction | Dreamus vs. Mgame Corp | Dreamus vs. Guyoung Technology Co |
| Dong A vs. SKONEC Entertainment Co | Dong A vs. Daewon Media Co | Dong A vs. MediaZen | Dong A vs. Next Entertainment World |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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