Correlation Between SCG PACKAGING and Dow Jones
Can any of the company-specific risk be diversified away by investing in both SCG PACKAGING 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 SCG PACKAGING and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCG PACKAGING FGN and Dow Jones Industrial, you can compare the effects of market volatilities on SCG PACKAGING 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 SCG PACKAGING with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCG PACKAGING and Dow Jones.
Diversification Opportunities for SCG PACKAGING and Dow Jones
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SCG and Dow is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding SCG PACKAGING FGN 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 SCG PACKAGING 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 SCG PACKAGING FGN 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 SCG PACKAGING i.e., SCG PACKAGING and Dow Jones go up and down completely randomly.
Pair Corralation between SCG PACKAGING and Dow Jones
Assuming the 90 days trading horizon SCG PACKAGING FGN is expected to generate 7.73 times more return on investment than Dow Jones. However, SCG PACKAGING is 7.73 times more volatile than Dow Jones Industrial. It trades about 0.06 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 29.00 in SCG PACKAGING FGN on August 31, 2024 and sell it today you would earn a total of 30.00 from holding SCG PACKAGING FGN or generate 103.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.16% |
| Values | Daily Returns |
SCG PACKAGING FGN vs. Dow Jones Industrial
Performance |
| Timeline |
SCG PACKAGING and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
SCG PACKAGING FGN
Pair trading matchups for SCG PACKAGING
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with SCG PACKAGING and Dow Jones
The main advantage of trading using opposite SCG PACKAGING and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCG PACKAGING 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.| SCG PACKAGING vs. Packaging of | SCG PACKAGING vs. Smurfit Kappa Group | SCG PACKAGING vs. Superior Plus Corp | SCG PACKAGING vs. Origin Agritech |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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.
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