Correlation Between Namyang Dairy and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Namyang Dairy and Dow Jones 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 Namyang Dairy and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namyang Dairy and Dow Jones Industrial, you can compare the effects of market volatilities on Namyang Dairy and Dow Jones 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 Namyang Dairy with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namyang Dairy and Dow Jones.
Diversification Opportunities for Namyang Dairy and Dow Jones
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Namyang and Dow is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Namyang Dairy and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Namyang Dairy 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 Namyang Dairy are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Namyang Dairy i.e., Namyang Dairy and Dow Jones go up and down completely randomly.
Pair Corralation between Namyang Dairy and Dow Jones
Assuming the 90 days trading horizon Namyang Dairy is expected to generate 102.08 times more return on investment than Dow Jones. However, Namyang Dairy is 102.08 times more volatile than Dow Jones Industrial. It trades about 0.07 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 4,262,651 in Namyang Dairy on September 12, 2024 and sell it today you would earn a total of 1,877,349 from holding Namyang Dairy or generate 44.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.31% |
| Values | Daily Returns |
Namyang Dairy vs. Dow Jones Industrial
Performance |
| Timeline |
Namyang Dairy and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Namyang Dairy
Pair trading matchups for Namyang Dairy
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Namyang Dairy and Dow Jones
The main advantage of trading using opposite Namyang Dairy and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namyang Dairy position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Namyang Dairy vs. Korea New Network | Namyang Dairy vs. ICD Co | Namyang Dairy vs. DYPNF CoLtd | Namyang Dairy vs. Solution Advanced Technology |
| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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