Correlation Between Dow Jones and Korea Information
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Korea Information 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 Information 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 Information Engineering, you can compare the effects of market volatilities on Dow Jones and Korea Information 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 Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Korea Information.
Diversification Opportunities for Dow Jones and Korea Information
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Korea is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Korea Information Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information 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 Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Dow Jones i.e., Dow Jones and Korea Information go up and down completely randomly.
Pair Corralation between Dow Jones and Korea Information
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.28 times more return on investment than Korea Information. However, Dow Jones Industrial is 3.61 times less risky than Korea Information. It trades about 0.05 of its potential returns per unit of risk. Korea Information Engineering is currently generating about 0.0 per unit of risk. If you would invest 4,372,934 in Dow Jones Industrial on November 7, 2024 and sell it today you would earn a total of 82,670 from holding Dow Jones Industrial or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Korea Information Engineering
Performance |
| Timeline |
Dow Jones and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Korea Information Engineering
Pair trading matchups for Korea Information
Pair Trading with Dow Jones and Korea Information
The main advantage of trading using opposite Dow Jones and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Korea Information 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 Information will offset losses from the drop in Korea Information's long position.| Dow Jones vs. Mako Mining Corp | Dow Jones vs. Reyna Silver Corp | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Trupanion |
| Korea Information vs. Iljin Display | Korea Information vs. KPX Green Chemical | Korea Information vs. Korea Petro Chemical | Korea Information vs. Miwon Chemical |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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