Correlation Between Dream Security and Daewon Chemical
Can any of the company-specific risk be diversified away by investing in both Dream Security and Daewon 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 Daewon 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 Daewon Chemical Co, you can compare the effects of market volatilities on Dream Security and Daewon 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 Daewon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Security and Daewon Chemical.
Diversification Opportunities for Dream Security and Daewon Chemical
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dream and Daewon is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co and Daewon Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewon 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 Daewon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewon Chemical has no effect on the direction of Dream Security i.e., Dream Security and Daewon Chemical go up and down completely randomly.
Pair Corralation between Dream Security and Daewon Chemical
Assuming the 90 days trading horizon Dream Security co is expected to generate 0.91 times more return on investment than Daewon Chemical. However, Dream Security co is 1.1 times less risky than Daewon Chemical. It trades about 0.13 of its potential returns per unit of risk. Daewon Chemical Co is currently generating about -0.02 per unit of risk. If you would invest 229,500 in Dream Security co on November 3, 2024 and sell it today you would earn a total of 124,500 from holding Dream Security co or generate 54.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dream Security co vs. Daewon Chemical Co
Performance |
| Timeline |
| Dream Security co |
| Daewon Chemical |
Dream Security and Daewon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Security and Daewon Chemical
The main advantage of trading using opposite Dream Security and Daewon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Security position performs unexpectedly, Daewon 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 Daewon Chemical will offset losses from the drop in Daewon Chemical's long position.| Dream Security vs. Nature and Environment | Dream Security vs. Ssangyong Information Communication | Dream Security vs. Nice Information Telecommunication | Dream Security vs. GS Retail Co |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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