Correlation Between Dow Jones and Korea Shipbuilding
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Korea Shipbuilding 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 Dow Jones and Korea Shipbuilding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Korea Shipbuilding Offshore, you can compare the effects of market volatilities on Dow Jones and Korea Shipbuilding 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 Dow Jones with a short position of Korea Shipbuilding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Korea Shipbuilding.
Diversification Opportunities for Dow Jones and Korea Shipbuilding
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Korea is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Korea Shipbuilding Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Shipbuilding and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Korea Shipbuilding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Shipbuilding has no effect on the direction of Dow Jones i.e., Dow Jones and Korea Shipbuilding go up and down completely randomly.
Pair Corralation between Dow Jones and Korea Shipbuilding
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.32 times less return on investment than Korea Shipbuilding. But when comparing it to its historical volatility, Dow Jones Industrial is 2.84 times less risky than Korea Shipbuilding. It trades about 0.27 of its potential returns per unit of risk. Korea Shipbuilding Offshore is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 19,050,000 in Korea Shipbuilding Offshore on August 29, 2024 and sell it today you would earn a total of 2,550,000 from holding Korea Shipbuilding Offshore or generate 13.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Korea Shipbuilding Offshore
Performance |
| Timeline |
Dow Jones and Korea Shipbuilding Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Korea Shipbuilding Offshore
Pair trading matchups for Korea Shipbuilding
Pair Trading with Dow Jones and Korea Shipbuilding
The main advantage of trading using opposite Dow Jones and Korea Shipbuilding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Korea Shipbuilding 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 Korea Shipbuilding will offset losses from the drop in Korea Shipbuilding's long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| Korea Shipbuilding vs. Samsung Electronics Co | Korea Shipbuilding vs. Samsung Electronics Co | Korea Shipbuilding vs. Hyundai Motor Co | Korea Shipbuilding vs. Hyundai Motor |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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