Correlation Between Dream Security and Hwasung Industrial
Can any of the company-specific risk be diversified away by investing in both Dream Security and Hwasung Industrial 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 Dream Security and Hwasung Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dream Security co and Hwasung Industrial Co, you can compare the effects of market volatilities on Dream Security and Hwasung Industrial 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 Dream Security with a short position of Hwasung Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Security and Hwasung Industrial.
Diversification Opportunities for Dream Security and Hwasung Industrial
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dream and Hwasung is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co and Hwasung Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwasung Industrial and Dream Security 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 Dream Security co are associated (or correlated) with Hwasung Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwasung Industrial has no effect on the direction of Dream Security i.e., Dream Security and Hwasung Industrial go up and down completely randomly.
Pair Corralation between Dream Security and Hwasung Industrial
Assuming the 90 days trading horizon Dream Security co is expected to under-perform the Hwasung Industrial. In addition to that, Dream Security is 3.08 times more volatile than Hwasung Industrial Co. It trades about -0.03 of its total potential returns per unit of risk. Hwasung Industrial Co is currently generating about 0.15 per unit of volatility. If you would invest 915,848 in Hwasung Industrial Co on October 14, 2024 and sell it today you would earn a total of 36,152 from holding Hwasung Industrial Co or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dream Security co vs. Hwasung Industrial Co
Performance |
| Timeline |
| Dream Security co |
| Hwasung Industrial |
Dream Security and Hwasung Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Security and Hwasung Industrial
The main advantage of trading using opposite Dream Security and Hwasung Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Security position performs unexpectedly, Hwasung Industrial 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 Hwasung Industrial will offset losses from the drop in Hwasung Industrial's long position.| Dream Security vs. Cuckoo Electronics Co | Dream Security vs. Vissem Electronics Co | Dream Security vs. Daewoo Electronic Components | Dream Security vs. Samwha Electronics Co |
| Hwasung Industrial vs. Songwon Industrial Co | Hwasung Industrial vs. ABOV Semiconductor Co | Hwasung Industrial vs. Handok Clean Tech | Hwasung Industrial vs. Cheryong Industrial CoLtd |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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