Correlation Between Dream Security and ISU Chemical
Can any of the company-specific risk be diversified away by investing in both Dream Security and ISU Chemical 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 ISU Chemical 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 ISU Chemical Co, you can compare the effects of market volatilities on Dream Security and ISU Chemical 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 ISU Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Security and ISU Chemical.
Diversification Opportunities for Dream Security and ISU Chemical
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dream and ISU is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co and ISU Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISU Chemical 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 ISU Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISU Chemical has no effect on the direction of Dream Security i.e., Dream Security and ISU Chemical go up and down completely randomly.
Pair Corralation between Dream Security and ISU Chemical
Assuming the 90 days trading horizon Dream Security co is expected to generate 1.79 times more return on investment than ISU Chemical. However, Dream Security is 1.79 times more volatile than ISU Chemical Co. It trades about 0.38 of its potential returns per unit of risk. ISU Chemical Co is currently generating about 0.33 per unit of risk. If you would invest 298,000 in Dream Security co on October 9, 2024 and sell it today you would earn a total of 118,000 from holding Dream Security co or generate 39.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dream Security co vs. ISU Chemical Co
Performance |
| Timeline |
| Dream Security co |
| ISU Chemical |
Dream Security and ISU Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Security and ISU Chemical
The main advantage of trading using opposite Dream Security and ISU Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Security position performs unexpectedly, ISU Chemical 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 ISU Chemical will offset losses from the drop in ISU Chemical's long position.| Dream Security vs. Lotte Data Communication | Dream Security vs. Daejung Chemicals Metals | Dream Security vs. Cheryong Industrial CoLtd | Dream Security vs. System and Application |
| ISU Chemical vs. AptaBio Therapeutics | ISU Chemical vs. Daewoo SBI SPAC | ISU Chemical vs. Dream Security co | ISU Chemical vs. Microfriend |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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