Correlation Between Dow Jones and Geumhwa Plant
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Geumhwa Plant 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 Geumhwa Plant 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 Geumhwa Plant Service, you can compare the effects of market volatilities on Dow Jones and Geumhwa Plant 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 Geumhwa Plant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Geumhwa Plant.
Diversification Opportunities for Dow Jones and Geumhwa Plant
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Geumhwa is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Geumhwa Plant Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geumhwa Plant Service 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 Geumhwa Plant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geumhwa Plant Service has no effect on the direction of Dow Jones i.e., Dow Jones and Geumhwa Plant go up and down completely randomly.
Pair Corralation between Dow Jones and Geumhwa Plant
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.63 times more return on investment than Geumhwa Plant. However, Dow Jones Industrial is 1.58 times less risky than Geumhwa Plant. It trades about 0.08 of its potential returns per unit of risk. Geumhwa Plant Service is currently generating about 0.0 per unit of risk. If you would invest 3,410,864 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 1,080,201 from holding Dow Jones Industrial or generate 31.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.58% |
| Values | Daily Returns |
Dow Jones Industrial vs. Geumhwa Plant Service
Performance |
| Timeline |
Dow Jones and Geumhwa Plant Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Geumhwa Plant Service
Pair trading matchups for Geumhwa Plant
Pair Trading with Dow Jones and Geumhwa Plant
The main advantage of trading using opposite Dow Jones and Geumhwa Plant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Geumhwa Plant 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 Geumhwa Plant will offset losses from the drop in Geumhwa Plant's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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