Correlation Between Dream Security and Woorim Machinery
Can any of the company-specific risk be diversified away by investing in both Dream Security and Woorim Machinery 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 Woorim Machinery 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 Woorim Machinery Co, you can compare the effects of market volatilities on Dream Security and Woorim Machinery 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 Woorim Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Security and Woorim Machinery.
Diversification Opportunities for Dream Security and Woorim Machinery
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dream and Woorim is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co and Woorim Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woorim Machinery 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 Woorim Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woorim Machinery has no effect on the direction of Dream Security i.e., Dream Security and Woorim Machinery go up and down completely randomly.
Pair Corralation between Dream Security and Woorim Machinery
Assuming the 90 days trading horizon Dream Security co is expected to generate 0.82 times more return on investment than Woorim Machinery. However, Dream Security co is 1.21 times less risky than Woorim Machinery. It trades about -0.07 of its potential returns per unit of risk. Woorim Machinery Co is currently generating about -0.08 per unit of risk. If you would invest 351,500 in Dream Security co on September 4, 2024 and sell it today you would lose (19,000) from holding Dream Security co or give up 5.41% 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. Woorim Machinery Co
Performance |
| Timeline |
| Dream Security co |
| Woorim Machinery |
Dream Security and Woorim Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Security and Woorim Machinery
The main advantage of trading using opposite Dream Security and Woorim Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Security position performs unexpectedly, Woorim Machinery 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 Woorim Machinery will offset losses from the drop in Woorim Machinery'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 |
| Woorim Machinery vs. LG Display | Woorim Machinery vs. Hyundai Motor | Woorim Machinery vs. Hyundai Motor Co | Woorim Machinery vs. Hyundai Motor 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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