Correlation Between Dow Jones and Kyung Chang
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Kyung Chang 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 Kyung Chang 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 Kyung Chang Industrial, you can compare the effects of market volatilities on Dow Jones and Kyung Chang 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 Kyung Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Kyung Chang.
Diversification Opportunities for Dow Jones and Kyung Chang
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Kyung is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Kyung Chang Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyung Chang Industrial 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 Kyung Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyung Chang Industrial has no effect on the direction of Dow Jones i.e., Dow Jones and Kyung Chang go up and down completely randomly.
Pair Corralation between Dow Jones and Kyung Chang
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.3 times more return on investment than Kyung Chang. However, Dow Jones Industrial is 3.38 times less risky than Kyung Chang. It trades about 0.33 of its potential returns per unit of risk. Kyung Chang Industrial is currently generating about 0.08 per unit of risk. If you would invest 4,239,227 in Dow Jones Industrial on November 3, 2024 and sell it today you would earn a total of 215,239 from holding Dow Jones Industrial or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Dow Jones Industrial vs. Kyung Chang Industrial
Performance |
| Timeline |
Dow Jones and Kyung Chang Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Kyung Chang Industrial
Pair trading matchups for Kyung Chang
Pair Trading with Dow Jones and Kyung Chang
The main advantage of trading using opposite Dow Jones and Kyung Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Kyung Chang 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 Kyung Chang will offset losses from the drop in Kyung Chang's long position.| Dow Jones vs. Rambler Metals and | Dow Jones vs. Nicola Mining | Dow Jones vs. Old Dominion Freight | Dow Jones vs. United Guardian |
| Kyung Chang vs. Samlip General Foods | Kyung Chang vs. DONGKUK TED METAL | Kyung Chang vs. Samji Electronics Co | Kyung Chang vs. PJ Electronics 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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