Correlation Between Dream Security and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Dream Security and Busan 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 Busan 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 Busan Industrial Co, you can compare the effects of market volatilities on Dream Security and Busan 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 Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Security and Busan Industrial.
Diversification Opportunities for Dream Security and Busan Industrial
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dream and Busan is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan 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 Busan Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Industrial has no effect on the direction of Dream Security i.e., Dream Security and Busan Industrial go up and down completely randomly.
Pair Corralation between Dream Security and Busan Industrial
Assuming the 90 days trading horizon Dream Security is expected to generate 1.94 times less return on investment than Busan Industrial. In addition to that, Dream Security is 2.43 times more volatile than Busan Industrial Co. It trades about 0.03 of its total potential returns per unit of risk. Busan Industrial Co is currently generating about 0.13 per unit of volatility. If you would invest 7,724,235 in Busan Industrial Co on October 24, 2024 and sell it today you would earn a total of 355,765 from holding Busan Industrial Co or generate 4.61% 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. Busan Industrial Co
Performance |
| Timeline |
| Dream Security co |
| Busan Industrial |
Dream Security and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Security and Busan Industrial
The main advantage of trading using opposite Dream Security and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Security position performs unexpectedly, Busan 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 Busan Industrial will offset losses from the drop in Busan Industrial's long position.| Dream Security vs. FNSTech Co | Dream Security vs. Genie Music | Dream Security vs. Narae Nanotech Corp | Dream Security vs. Vitzro Tech Co |
| Busan Industrial vs. Handok Clean Tech | Busan Industrial vs. DB Financial Investment | Busan Industrial vs. KTB Investment Securities | Busan Industrial vs. Atinum Investment 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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