Correlation Between Dream Security and Samyoung Electronics

Can any of the company-specific risk be diversified away by investing in both Dream Security and Samyoung 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 Samyoung 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 Samyoung Electronics Co, you can compare the effects of market volatilities on Dream Security and Samyoung 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 Samyoung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Security and Samyoung Electronics.

Diversification Opportunities for Dream Security and Samyoung Electronics

0.65

Correlation Coefficient

Dream Security  Samyoung Electronics

Poor diversification

The 3 months correlation between Dream and Samyoung is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co and Samyoung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samyoung 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 Samyoung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samyoung Electronics has no effect on the direction of Dream Security i.e., Dream Security and Samyoung Electronics go up and down completely randomly.

Pair Corralation between Dream Security and Samyoung Electronics

Assuming the 90 days trading horizon Dream Security is expected to generate 1.06 times less return on investment than Samyoung Electronics. In addition to that, Dream Security is 1.78 times more volatile than Samyoung Electronics Co. It trades about 0.1 of its total potential returns per unit of risk. Samyoung Electronics Co is currently generating about 0.18 per unit of volatility. If you would invest  879,000  in Samyoung Electronics Co on August 31, 2024 and sell it today you would earn a total of  136,000  from holding Samyoung Electronics Co or generate 15.47% return on investment over 90 days.

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

Dream Security co  vs.  Samyoung Electronics Co

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.

Samyoung Electronics

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samyoung Electronics Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samyoung Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dream Security and Samyoung Electronics

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

The idea behind Dream Security co and Samyoung Electronics 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.