Correlation Between Dream Security and Dong A
Can any of the company-specific risk be diversified away by investing in both Dream Security and Dong A 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 Dong A 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 Dong A Steel Technology, you can compare the effects of market volatilities on Dream Security and Dong A 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 Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Security and Dong A.
Diversification Opportunities for Dream Security and Dong A
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dream and Dong is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co and Dong A Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong A Steel 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 Dong A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong A Steel has no effect on the direction of Dream Security i.e., Dream Security and Dong A go up and down completely randomly.
Pair Corralation between Dream Security and Dong A
Assuming the 90 days trading horizon Dream Security co is expected to under-perform the Dong A. But the stock apears to be less risky and, when comparing its historical volatility, Dream Security co is 1.65 times less risky than Dong A. The stock trades about -0.02 of its potential returns per unit of risk. The Dong A Steel Technology is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 322,000 in Dong A Steel Technology on August 28, 2024 and sell it today you would earn a total of 31,500 from holding Dong A Steel Technology or generate 9.78% 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. Dong A Steel Technology
Performance |
| Timeline |
| Dream Security co |
| Dong A Steel |
Dream Security and Dong A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Security and Dong A
The main advantage of trading using opposite Dream Security and Dong A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Security position performs unexpectedly, Dong A 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 Dong A will offset losses from the drop in Dong A's long position.| Dream Security vs. VAIV Co | Dream Security vs. FLITTO Inc | Dream Security vs. Innodep | Dream Security vs. WISE iTech Co |
| Dong A vs. AptaBio Therapeutics | Dong A vs. Daewoo SBI SPAC | Dong A vs. Dream Security co | Dong A 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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