Correlation Between Dream Security and BooKook Steel

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

Diversification Opportunities for Dream Security and BooKook Steel

0.49

Correlation Coefficient

Dream Security  BooKook Steel

Very weak diversification

The 3 months correlation between Dream and BooKook is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co and BooKook Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BooKook Steel 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 BooKook Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BooKook Steel has no effect on the direction of Dream Security i.e., Dream Security and BooKook Steel go up and down completely randomly.

Pair Corralation between Dream Security and BooKook Steel

Assuming the 90 days trading horizon Dream Security is expected to generate 1.61 times less return on investment than BooKook Steel. In addition to that, Dream Security is 1.83 times more volatile than BooKook Steel Co. It trades about 0.03 of its total potential returns per unit of risk. BooKook Steel Co is currently generating about 0.08 per unit of volatility. If you would invest  226,495  in BooKook Steel Co on December 1, 2024 and sell it today you would earn a total of  21,005  from holding BooKook Steel Co or generate 9.27% return on investment over 90 days.

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

Dream Security co  vs.  BooKook Steel Co

Dream Security co

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dream Security co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dream Security may actually be approaching a critical reversion point that can send shares even higher in April 2025.

BooKook Steel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BooKook Steel Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BooKook Steel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dream Security and BooKook Steel

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

The idea behind Dream Security co and BooKook Steel 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.