Correlation Between Dream Residential and Flagship Communities

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

Diversification Opportunities for Dream Residential and Flagship Communities

0.75

Correlation Coefficient

Dream Residential  Flagship Communities

Poor diversification

The 3 months correlation between Dream and Flagship is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dream Residential Real and Flagship Communities Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flagship Communities Real 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 Flagship Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flagship Communities Real has no effect on the direction of Dream Residential i.e., Dream Residential and Flagship Communities go up and down completely randomly.

Pair Corralation between Dream Residential and Flagship Communities

Assuming the 90 days trading horizon Dream Residential Real is expected to generate 1.69 times more return on investment than Flagship Communities. However, Dream Residential is 1.69 times more volatile than Flagship Communities Real. It trades about 0.11 of its potential returns per unit of risk. Flagship Communities Real is currently generating about 0.15 per unit of risk. If you would invest  832.00  in Dream Residential Real on April 25, 2025 and sell it today you would earn a total of  98.00  from holding Dream Residential Real or generate 11.78% return on investment over 90 days.

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

Dream Residential Real  vs.  Flagship Communities Real

Dream Residential Real

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dream Residential Real are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Dream Residential may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Flagship Communities Real

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Flagship Communities Real are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Flagship Communities may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Dream Residential and Flagship Communities

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

The idea behind Dream Residential Real and Flagship Communities 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.