Correlation Between Dow Jones and SK Bioscience
Can any of the company-specific risk be diversified away by investing in both Dow Jones and SK Bioscience 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 SK Bioscience 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 SK Bioscience Co, you can compare the effects of market volatilities on Dow Jones and SK Bioscience 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 SK Bioscience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and SK Bioscience.
Diversification Opportunities for Dow Jones and SK Bioscience
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and 302440 is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and SK Bioscience Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Bioscience 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 SK Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Bioscience has no effect on the direction of Dow Jones i.e., Dow Jones and SK Bioscience go up and down completely randomly.
Pair Corralation between Dow Jones and SK Bioscience
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.27 times more return on investment than SK Bioscience. However, Dow Jones Industrial is 3.73 times less risky than SK Bioscience. It trades about 0.08 of its potential returns per unit of risk. SK Bioscience Co is currently generating about -0.02 per unit of risk. If you would invest 3,424,593 in Dow Jones Industrial on November 2, 2024 and sell it today you would earn a total of 1,063,620 from holding Dow Jones Industrial or generate 31.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.77% |
| Values | Daily Returns |
Dow Jones Industrial vs. SK Bioscience Co
Performance |
| Timeline |
Dow Jones and SK Bioscience Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
SK Bioscience Co
Pair trading matchups for SK Bioscience
Pair Trading with Dow Jones and SK Bioscience
The main advantage of trading using opposite Dow Jones and SK Bioscience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, SK Bioscience 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 SK Bioscience will offset losses from the drop in SK Bioscience's long position.| Dow Jones vs. Cincinnati Financial | Dow Jones vs. Kellanova | Dow Jones vs. Acme United | Dow Jones vs. Procter Gamble |
| SK Bioscience vs. Korea Information Engineering | SK Bioscience vs. SCI Information Service | SK Bioscience vs. Inzi Display CoLtd | SK Bioscience vs. Lotte Data Communication |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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