Correlation Between Dream Residential and BSR Real

Can any of the company-specific risk be diversified away by investing in both Dream Residential and BSR Real 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 Residential and BSR Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dream Residential Real and BSR Real Estate, you can compare the effects of market volatilities on Dream Residential and BSR Real 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 Residential with a short position of BSR Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Residential and BSR Real.

Diversification Opportunities for Dream Residential and BSR Real

0.62

Correlation Coefficient

Dream Residential  BSR Real

Poor diversification

The 3 months correlation between Dream and BSR is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dream Residential Real and BSR Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BSR Real Estate and Dream Residential 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 Residential Real are associated (or correlated) with BSR Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSR Real Estate has no effect on the direction of Dream Residential i.e., Dream Residential and BSR Real go up and down completely randomly.

Pair Corralation between Dream Residential and BSR Real

Assuming the 90 days horizon Dream Residential Real is expected to generate 2.19 times more return on investment than BSR Real. However, Dream Residential is 2.19 times more volatile than BSR Real Estate. It trades about -0.07 of its potential returns per unit of risk. BSR Real Estate is currently generating about -0.16 per unit of risk. If you would invest  718.00  in Dream Residential Real on October 8, 2024 and sell it today you would lose (78.00) from holding Dream Residential Real or give up 10.86% of portfolio value over 90 days.

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

Dream Residential Real  vs.  BSR Real Estate

Dream Residential Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dream Residential Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

BSR Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BSR Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Dream Residential and BSR Real

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

The idea behind Dream Residential Real and BSR Real Estate 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.