Correlation Between Dreamus and Konan Technology

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

By analyzing existing cross correlation between Dreamus Company and Konan Technology, you can compare the effects of market volatilities on Dreamus and Konan Technology 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 Dreamus with a short position of Konan Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreamus and Konan Technology.

Diversification Opportunities for Dreamus and Konan Technology

-0.58

Correlation Coefficient

Dreamus  Konan Technology

Excellent diversification

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

Pair Corralation between Dreamus and Konan Technology

Assuming the 90 days trading horizon Dreamus Company is expected to under-perform the Konan Technology. In addition to that, Dreamus is 1.02 times more volatile than Konan Technology. It trades about -0.08 of its total potential returns per unit of risk. Konan Technology is currently generating about -0.05 per unit of volatility. If you would invest  3,225,000  in Konan Technology on August 25, 2024 and sell it today you would lose (1,155,000) from holding Konan Technology or give up 35.81% of portfolio value over 90 days.

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

Dreamus Company  vs.  Konan Technology

Dreamus Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dreamus Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Konan Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Konan Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Konan Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dreamus and Konan Technology

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

The idea behind Dreamus Company and Konan Technology 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.