Correlation Between Dream Security and Kumho Industrial
Can any of the company-specific risk be diversified away by investing in both Dream Security and Kumho 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 Kumho 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 Kumho Industrial Co, you can compare the effects of market volatilities on Dream Security and Kumho 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 Kumho Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Security and Kumho Industrial.
Diversification Opportunities for Dream Security and Kumho Industrial
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dream and Kumho is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co and Kumho Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho 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 Kumho Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Industrial has no effect on the direction of Dream Security i.e., Dream Security and Kumho Industrial go up and down completely randomly.
Pair Corralation between Dream Security and Kumho Industrial
Assuming the 90 days trading horizon Dream Security co is expected to under-perform the Kumho Industrial. In addition to that, Dream Security is 3.64 times more volatile than Kumho Industrial Co. It trades about -0.17 of its total potential returns per unit of risk. Kumho Industrial Co is currently generating about -0.45 per unit of volatility. If you would invest 269,000 in Kumho Industrial Co on November 4, 2024 and sell it today you would lose (22,000) from holding Kumho Industrial Co or give up 8.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dream Security co vs. Kumho Industrial Co
Performance |
| Timeline |
| Dream Security co |
| Kumho Industrial |
Dream Security and Kumho Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Security and Kumho Industrial
The main advantage of trading using opposite Dream Security and Kumho Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Security position performs unexpectedly, Kumho 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 Kumho Industrial will offset losses from the drop in Kumho Industrial's long position.| Dream Security vs. Sangsangin Investment Securities | Dream Security vs. Duksan Hi Metal | Dream Security vs. E Investment Development | Dream Security vs. Daiyang Metal Co |
| Kumho Industrial vs. TS Investment Corp | Kumho Industrial vs. SBI Investment KOREA | Kumho Industrial vs. Sam Yang Foods | Kumho Industrial vs. Stic Investments |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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