Correlation Between Daeduck Electronics and Dream Security

Can any of the company-specific risk be diversified away by investing in both Daeduck Electronics and Dream Security 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 Daeduck Electronics and Dream Security into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Daeduck Electronics Co and Dream Security co, you can compare the effects of market volatilities on Daeduck Electronics and Dream Security 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 Daeduck Electronics with a short position of Dream Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daeduck Electronics and Dream Security.

Diversification Opportunities for Daeduck Electronics and Dream Security

0.35

Correlation Coefficient

Daeduck Electronics  Dream Security

Weak diversification

The 3 months correlation between Daeduck and Dream is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Daeduck Electronics Co and Dream Security co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Security co and Daeduck Electronics 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 Daeduck Electronics Co are associated (or correlated) with Dream Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Security co has no effect on the direction of Daeduck Electronics i.e., Daeduck Electronics and Dream Security go up and down completely randomly.

Pair Corralation between Daeduck Electronics and Dream Security

Assuming the 90 days trading horizon Daeduck Electronics is expected to generate 1.78 times less return on investment than Dream Security. But when comparing it to its historical volatility, Daeduck Electronics Co is 3.6 times less risky than Dream Security. It trades about 0.19 of its potential returns per unit of risk. Dream Security co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  316,000  in Dream Security co on September 20, 2024 and sell it today you would earn a total of  51,500  from holding Dream Security co or generate 16.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Daeduck Electronics Co  vs.  Dream Security co

Daeduck Electronics

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Daeduck Electronics Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daeduck Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dream Security co

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dream Security co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dream Security sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daeduck Electronics and Dream Security

The main advantage of trading using opposite Daeduck Electronics and Dream Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daeduck Electronics position performs unexpectedly, Dream Security 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 Dream Security will offset losses from the drop in Dream Security's long position.

The idea behind Daeduck Electronics Co and Dream Security co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.