Correlation Between Dream Security and GemVaxKAEL CoLtd

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

Diversification Opportunities for Dream Security and GemVaxKAEL CoLtd

-0.36

Correlation Coefficient

Dream Security  GemVaxKAEL CoLtd

Very good diversification

The 3 months correlation between Dream and GemVaxKAEL is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co and GemVaxKAEL CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GemVaxKAEL CoLtd 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 GemVaxKAEL CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GemVaxKAEL CoLtd has no effect on the direction of Dream Security i.e., Dream Security and GemVaxKAEL CoLtd go up and down completely randomly.

Pair Corralation between Dream Security and GemVaxKAEL CoLtd

Assuming the 90 days trading horizon Dream Security co is expected to generate 0.54 times more return on investment than GemVaxKAEL CoLtd. However, Dream Security co is 1.86 times less risky than GemVaxKAEL CoLtd. It trades about 0.12 of its potential returns per unit of risk. GemVaxKAEL CoLtd is currently generating about -0.05 per unit of risk. If you would invest  306,500  in Dream Security co on October 5, 2024 and sell it today you would earn a total of  80,000  from holding Dream Security co or generate 26.1% return on investment over 90 days.

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

Dream Security co  vs.  GemVaxKAEL CoLtd

Dream Security co

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dream Security co are ranked lower than 9 (%) 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.

GemVaxKAEL CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GemVaxKAEL CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dream Security and GemVaxKAEL CoLtd

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

The idea behind Dream Security co and GemVaxKAEL CoLtd 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..