Correlation Between Dream Security and FNSTech

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

Diversification Opportunities for Dream Security and FNSTech

-0.55

Correlation Coefficient

Dream Security  FNSTech

Excellent diversification

The 3 months correlation between Dream and FNSTech is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co and FNSTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNSTech 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 FNSTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNSTech has no effect on the direction of Dream Security i.e., Dream Security and FNSTech go up and down completely randomly.

Pair Corralation between Dream Security and FNSTech

Assuming the 90 days trading horizon Dream Security co is expected to generate 0.78 times more return on investment than FNSTech. However, Dream Security co is 1.29 times less risky than FNSTech. It trades about 0.1 of its potential returns per unit of risk. FNSTech Co is currently generating about -0.1 per unit of risk. If you would invest  296,000  in Dream Security co on August 31, 2024 and sell it today you would earn a total of  39,000  from holding Dream Security co or generate 13.18% return on investment over 90 days.

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

Dream Security co  vs.  FNSTech 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.

FNSTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FNSTech Co 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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dream Security and FNSTech

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

The idea behind Dream Security co and FNSTech 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.