Correlation Between Daejung Chemicals and Dream Security
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals 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 Daejung Chemicals and Dream Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daejung Chemicals Metals and Dream Security co, you can compare the effects of market volatilities on Daejung Chemicals 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 Daejung Chemicals with a short position of Dream Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and Dream Security.
Diversification Opportunities for Daejung Chemicals and Dream Security
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daejung and Dream is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals 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 Daejung Chemicals 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 Daejung Chemicals Metals 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 Daejung Chemicals i.e., Daejung Chemicals and Dream Security go up and down completely randomly.
Pair Corralation between Daejung Chemicals and Dream Security
Assuming the 90 days trading horizon Daejung Chemicals Metals is expected to under-perform the Dream Security. But the stock apears to be less risky and, when comparing its historical volatility, Daejung Chemicals Metals is 1.51 times less risky than Dream Security. The stock trades about -0.01 of its potential returns per unit of risk. The Dream Security co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 346,000 in Dream Security co on October 25, 2024 and sell it today you would earn a total of 15,000 from holding Dream Security co or generate 4.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. Dream Security co
Performance |
| Timeline |
| Daejung Chemicals Metals |
| Dream Security co |
Daejung Chemicals and Dream Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and Dream Security
The main advantage of trading using opposite Daejung Chemicals and Dream Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals 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.| Daejung Chemicals vs. Automobile Pc | Daejung Chemicals vs. Korean Drug Co | Daejung Chemicals vs. TS Investment Corp | Daejung Chemicals vs. Ssangyong Information Communication |
| Dream Security vs. Nable Communications | Dream Security vs. Samyoung Electronics Co | Dream Security vs. Samji Electronics Co | Dream Security vs. Shinil Electronics 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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