Correlation Between Dream Impact and Dream Residential

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

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

Diversification Opportunities for Dream Impact and Dream Residential

-0.58

Correlation Coefficient

Dream Impact  Dream Residential

Excellent diversification

The 3 months correlation between Dream and Dream is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dream Impact Trust and Dream Residential Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Residential Real and Dream Impact 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 Impact Trust are associated (or correlated) with Dream Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Residential Real has no effect on the direction of Dream Impact i.e., Dream Impact and Dream Residential go up and down completely randomly.

Pair Corralation between Dream Impact and Dream Residential

Assuming the 90 days trading horizon Dream Impact Trust is expected to under-perform the Dream Residential. But the stock apears to be less risky and, when comparing its historical volatility, Dream Impact Trust is 1.03 times less risky than Dream Residential. The stock trades about -0.11 of its potential returns per unit of risk. The Dream Residential Real is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  628.00  in Dream Residential Real on December 30, 2024 and sell it today you would earn a total of  252.00  from holding Dream Residential Real or generate 40.13% return on investment over 90 days.

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

Dream Impact Trust  vs.  Dream Residential Real

Dream Impact Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dream Impact Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Dream Residential Real

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dream Residential Real are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Dream Residential unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dream Impact and Dream Residential

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

The idea behind Dream Impact Trust and Dream Residential Real 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.