Correlation Between Dream Security and APro

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

Diversification Opportunities for Dream Security and APro

0.05

Correlation Coefficient

Dream Security  APro

Significant diversification

The 3 months correlation between Dream and APro is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dream Security co and APro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APro 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 APro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APro has no effect on the direction of Dream Security i.e., Dream Security and APro go up and down completely randomly.

Pair Corralation between Dream Security and APro

Assuming the 90 days trading horizon Dream Security co is expected to under-perform the APro. In addition to that, Dream Security is 1.07 times more volatile than APro Co. It trades about -0.1 of its total potential returns per unit of risk. APro Co is currently generating about 0.01 per unit of volatility. If you would invest  507,000  in APro Co on December 31, 2024 and sell it today you would lose (3,000) from holding APro Co or give up 0.59% of portfolio value over 90 days.

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

Dream Security co  vs.  APro Co

Dream Security co

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dream Security 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 May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

APro

Risk-Adjusted Performance

Weak

Over the last 90 days APro Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, APro is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dream Security and APro

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

The idea behind Dream Security co and APro 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.