Correlation Between Dream Security and Derkwoo Electronics
Can any of the company-specific risk be diversified away by investing in both Dream Security and Derkwoo Electronics 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 Derkwoo Electronics 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 Derkwoo Electronics Co, you can compare the effects of market volatilities on Dream Security and Derkwoo Electronics 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 Derkwoo Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Security and Derkwoo Electronics.
Diversification Opportunities for Dream Security and Derkwoo Electronics
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dream and Derkwoo is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co and Derkwoo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Derkwoo Electronics 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 Derkwoo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Derkwoo Electronics has no effect on the direction of Dream Security i.e., Dream Security and Derkwoo Electronics go up and down completely randomly.
Pair Corralation between Dream Security and Derkwoo Electronics
Assuming the 90 days trading horizon Dream Security co is expected to generate 0.94 times more return on investment than Derkwoo Electronics. However, Dream Security co is 1.07 times less risky than Derkwoo Electronics. It trades about 0.0 of its potential returns per unit of risk. Derkwoo Electronics Co is currently generating about -0.12 per unit of risk. If you would invest 338,000 in Dream Security co on September 3, 2024 and sell it today you would lose (11,000) from holding Dream Security co or give up 3.25% 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. Derkwoo Electronics Co
Performance |
| Timeline |
| Dream Security co |
| Derkwoo Electronics |
Dream Security and Derkwoo Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Security and Derkwoo Electronics
The main advantage of trading using opposite Dream Security and Derkwoo Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Security position performs unexpectedly, Derkwoo Electronics 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 Derkwoo Electronics will offset losses from the drop in Derkwoo Electronics' long position.| Dream Security vs. VAIV Co | Dream Security vs. FLITTO Inc | Dream Security vs. Innodep | Dream Security vs. WISE iTech Co |
| Derkwoo Electronics vs. Samsung Electronics Co | Derkwoo Electronics vs. Samsung Electronics Co | Derkwoo Electronics vs. LG Energy Solution | Derkwoo Electronics vs. SK Hynix |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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