Correlation Between Dream Security and Doosan Heavy
Can any of the company-specific risk be diversified away by investing in both Dream Security and Doosan Heavy 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 Doosan Heavy 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 Doosan Heavy Ind, you can compare the effects of market volatilities on Dream Security and Doosan Heavy 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 Doosan Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Security and Doosan Heavy.
Diversification Opportunities for Dream Security and Doosan Heavy
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dream and Doosan is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co and Doosan Heavy Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan Heavy Ind 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 Doosan Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan Heavy Ind has no effect on the direction of Dream Security i.e., Dream Security and Doosan Heavy go up and down completely randomly.
Pair Corralation between Dream Security and Doosan Heavy
Assuming the 90 days trading horizon Dream Security is expected to generate 1.22 times less return on investment than Doosan Heavy. In addition to that, Dream Security is 1.1 times more volatile than Doosan Heavy Ind. It trades about 0.02 of its total potential returns per unit of risk. Doosan Heavy Ind is currently generating about 0.03 per unit of volatility. If you would invest 1,635,000 in Doosan Heavy Ind on September 4, 2024 and sell it today you would earn a total of 435,000 from holding Doosan Heavy Ind or generate 26.61% 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. Doosan Heavy Ind
Performance |
| Timeline |
| Dream Security co |
| Doosan Heavy Ind |
Dream Security and Doosan Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Security and Doosan Heavy
The main advantage of trading using opposite Dream Security and Doosan Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Security position performs unexpectedly, Doosan Heavy 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 Doosan Heavy will offset losses from the drop in Doosan Heavy's long position.| Dream Security vs. Kukil Metal Co | Dream Security vs. Kukdong Oil Chemicals | Dream Security vs. Youngsin Metal Industrial | Dream Security vs. LG Chemicals |
| Doosan Heavy vs. LG Household Healthcare | Doosan Heavy vs. Finebesteel | Doosan Heavy vs. Husteel | Doosan Heavy vs. DONGKUK STEEL MILL |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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