Correlation Between Dream Security and AFW
Can any of the company-specific risk be diversified away by investing in both Dream Security and AFW 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 AFW 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 AFW Co, you can compare the effects of market volatilities on Dream Security and AFW 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 AFW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Security and AFW.
Diversification Opportunities for Dream Security and AFW
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dream and AFW is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co and AFW Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFW Co 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 AFW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFW Co has no effect on the direction of Dream Security i.e., Dream Security and AFW go up and down completely randomly.
Pair Corralation between Dream Security and AFW
Assuming the 90 days trading horizon Dream Security co is expected to generate 1.33 times more return on investment than AFW. However, Dream Security is 1.33 times more volatile than AFW Co. It trades about -0.02 of its potential returns per unit of risk. AFW Co is currently generating about -0.37 per unit of risk. If you would invest 342,000 in Dream Security co on August 31, 2024 and sell it today you would lose (7,000) from holding Dream Security co or give up 2.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dream Security co vs. AFW Co
Performance |
| Timeline |
| Dream Security co |
| AFW Co |
Dream Security and AFW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Security and AFW
The main advantage of trading using opposite Dream Security and AFW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Security position performs unexpectedly, AFW 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 AFW will offset losses from the drop in AFW's long position.| Dream Security vs. Cuckoo Homesys Co | Dream Security vs. LB Investment | Dream Security vs. Hanmi Semiconductor Co | Dream Security vs. SBI Investment KOREA |
| AFW vs. Taeyang Metal Industrial | AFW vs. Hanmi Semiconductor Co | AFW vs. Kukil Metal Co | AFW vs. ITM Semiconductor 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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