Correlation Between Dow Jones and Sungwoo Electronics
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Sungwoo Electronics 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 Sungwoo Electronics 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 Sungwoo Electronics Co, you can compare the effects of market volatilities on Dow Jones and Sungwoo Electronics 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 Sungwoo Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Sungwoo Electronics.
Diversification Opportunities for Dow Jones and Sungwoo Electronics
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Sungwoo is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Sungwoo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungwoo Electronics 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 Sungwoo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungwoo Electronics has no effect on the direction of Dow Jones i.e., Dow Jones and Sungwoo Electronics go up and down completely randomly.
Pair Corralation between Dow Jones and Sungwoo Electronics
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.08 times less return on investment than Sungwoo Electronics. But when comparing it to its historical volatility, Dow Jones Industrial is 4.03 times less risky than Sungwoo Electronics. It trades about 0.11 of its potential returns per unit of risk. Sungwoo Electronics Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 273,000 in Sungwoo Electronics Co on August 28, 2024 and sell it today you would earn a total of 152,500 from holding Sungwoo Electronics Co or generate 55.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.44% |
| Values | Daily Returns |
Dow Jones Industrial vs. Sungwoo Electronics Co
Performance |
| Timeline |
Dow Jones and Sungwoo Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Sungwoo Electronics Co
Pair trading matchups for Sungwoo Electronics
Pair Trading with Dow Jones and Sungwoo Electronics
The main advantage of trading using opposite Dow Jones and Sungwoo Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Sungwoo Electronics 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 Sungwoo Electronics will offset losses from the drop in Sungwoo Electronics' 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 |
| Sungwoo Electronics vs. AptaBio Therapeutics | Sungwoo Electronics vs. Daewoo SBI SPAC | Sungwoo Electronics vs. Dream Security co | Sungwoo Electronics vs. Microfriend |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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