Correlation Between Dream Security and Lake Materials
Can any of the company-specific risk be diversified away by investing in both Dream Security and Lake Materials 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 Lake Materials 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 Lake Materials Co, you can compare the effects of market volatilities on Dream Security and Lake Materials 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 Lake Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Security and Lake Materials.
Diversification Opportunities for Dream Security and Lake Materials
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dream and Lake is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co and Lake Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Materials 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 Lake Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Materials has no effect on the direction of Dream Security i.e., Dream Security and Lake Materials go up and down completely randomly.
Pair Corralation between Dream Security and Lake Materials
Assuming the 90 days trading horizon Dream Security is expected to generate 14.21 times less return on investment than Lake Materials. But when comparing it to its historical volatility, Dream Security co is 2.63 times less risky than Lake Materials. It trades about 0.07 of its potential returns per unit of risk. Lake Materials Co is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 1,160,000 in Lake Materials Co on November 22, 2024 and sell it today you would earn a total of 600,000 from holding Lake Materials Co or generate 51.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dream Security co vs. Lake Materials Co
Performance |
| Timeline |
| Dream Security co |
| Lake Materials |
Dream Security and Lake Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Security and Lake Materials
The main advantage of trading using opposite Dream Security and Lake Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Security position performs unexpectedly, Lake Materials 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 Lake Materials will offset losses from the drop in Lake Materials' long position.| Dream Security vs. Industrial Bank | Dream Security vs. Dgb Financial | Dream Security vs. LG Display Co | Dream Security vs. Sangsin Energy Display |
| Lake Materials vs. Sungmoon Electronics Co | Lake Materials vs. Miwon Chemicals Co | Lake Materials vs. Seoul Electronics Telecom | Lake Materials vs. SK Chemicals 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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