Correlation Between Kolon Plastics and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Kolon Plastics 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 Kolon Plastics and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kolon Plastics and Dow Jones Industrial, you can compare the effects of market volatilities on Kolon Plastics 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 Kolon Plastics with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kolon Plastics and Dow Jones.
Diversification Opportunities for Kolon Plastics and Dow Jones
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kolon and Dow is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Kolon Plastics 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 Kolon Plastics 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 Kolon Plastics 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 Kolon Plastics i.e., Kolon Plastics and Dow Jones go up and down completely randomly.
Pair Corralation between Kolon Plastics and Dow Jones
Assuming the 90 days trading horizon Kolon Plastics is expected to under-perform the Dow Jones. In addition to that, Kolon Plastics is 3.54 times more volatile than Dow Jones Industrial. It trades about -0.04 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of volatility. If you would invest 3,773,511 in Dow Jones Industrial on October 12, 2024 and sell it today you would earn a total of 490,009 from holding Dow Jones Industrial or generate 12.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.74% |
| Values | Daily Returns |
Kolon Plastics vs. Dow Jones Industrial
Performance |
| Timeline |
Kolon Plastics and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Kolon Plastics
Pair trading matchups for Kolon Plastics
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Kolon Plastics and Dow Jones
The main advantage of trading using opposite Kolon Plastics and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kolon Plastics 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.| Kolon Plastics vs. Leaders Technology Investment | Kolon Plastics vs. Korea Investment Holdings | Kolon Plastics vs. Coloray International Investment | Kolon Plastics vs. SBI Investment KOREA |
| Dow Jones vs. Toro | Dow Jones vs. Foot Locker | Dow Jones vs. Abercrombie Fitch | Dow Jones vs. 51Talk Online Education |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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