Correlation Between Eagon Industrial and Dream Security

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

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

Diversification Opportunities for Eagon Industrial and Dream Security

0.06

Correlation Coefficient

Eagon Industrial  Dream Security

Significant diversification

The 3 months correlation between Eagon and Dream is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Eagon Industrial 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 Eagon Industrial 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 Eagon Industrial 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 Eagon Industrial i.e., Eagon Industrial and Dream Security go up and down completely randomly.

Pair Corralation between Eagon Industrial and Dream Security

Assuming the 90 days trading horizon Eagon Industrial Co is expected to generate 1.42 times more return on investment than Dream Security. However, Eagon Industrial is 1.42 times more volatile than Dream Security co. It trades about 0.02 of its potential returns per unit of risk. Dream Security co is currently generating about -0.03 per unit of risk. If you would invest  525,692  in Eagon Industrial Co on December 11, 2024 and sell it today you would lose (6,692) from holding Eagon Industrial Co or give up 1.27% of portfolio value over 90 days.

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

Eagon Industrial Co  vs.  Dream Security co

Eagon Industrial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eagon Industrial Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Eagon Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dream Security co

Risk-Adjusted Performance

Insignificant

Over the last 90 days Dream Security co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Eagon Industrial and Dream Security

The main advantage of trading using opposite Eagon Industrial and Dream Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagon Industrial 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 Eagon Industrial 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.

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 CEOs Directory module to screen CEOs from public companies around the world.