Correlation Between Dream Security and Hansol Chemical
Can any of the company-specific risk be diversified away by investing in both Dream Security and Hansol 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 Hansol 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 Hansol Chemical Co, you can compare the effects of market volatilities on Dream Security and Hansol 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 Hansol Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Security and Hansol Chemical.
Diversification Opportunities for Dream Security and Hansol Chemical
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dream and Hansol is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co and Hansol Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansol 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 Hansol Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansol Chemical has no effect on the direction of Dream Security i.e., Dream Security and Hansol Chemical go up and down completely randomly.
Pair Corralation between Dream Security and Hansol Chemical
Assuming the 90 days trading horizon Dream Security co is expected to generate 0.85 times more return on investment than Hansol Chemical. However, Dream Security co is 1.17 times less risky than Hansol Chemical. It trades about -0.02 of its potential returns per unit of risk. Hansol Chemical Co is currently generating about -0.08 per unit of risk. If you would invest 367,500 in Dream Security co on August 25, 2024 and sell it today you would lose (52,000) from holding Dream Security co or give up 14.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dream Security co vs. Hansol Chemical Co
Performance |
| Timeline |
| Dream Security co |
| Hansol Chemical |
Dream Security and Hansol Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Security and Hansol Chemical
The main advantage of trading using opposite Dream Security and Hansol Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Security position performs unexpectedly, Hansol 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 Hansol Chemical will offset losses from the drop in Hansol Chemical's long position.| Dream Security vs. MetaLabs Co | Dream Security vs. Hanjoo Light Metal | Dream Security vs. Hannong Chemicals | Dream Security vs. Youngsin Metal Industrial |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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