Correlation Between Dow Jones and SK IE
Can any of the company-specific risk be diversified away by investing in both Dow Jones and SK IE 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 IE 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 IE Technology, you can compare the effects of market volatilities on Dow Jones and SK IE 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 IE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and SK IE.
Diversification Opportunities for Dow Jones and SK IE
Excellent diversification
The 3 months correlation between Dow and 361610 is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and SK IE Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK IE Technology 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 IE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK IE Technology has no effect on the direction of Dow Jones i.e., Dow Jones and SK IE go up and down completely randomly.
Pair Corralation between Dow Jones and SK IE
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.3 times more return on investment than SK IE. However, Dow Jones Industrial is 3.36 times less risky than SK IE. It trades about 0.37 of its potential returns per unit of risk. SK IE Technology is currently generating about -0.37 per unit of risk. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. SK IE Technology
Performance |
| Timeline |
Dow Jones and SK IE Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
SK IE Technology
Pair trading matchups for SK IE
Pair Trading with Dow Jones and SK IE
The main advantage of trading using opposite Dow Jones and SK IE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, SK IE 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 IE will offset losses from the drop in SK IE's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| SK IE vs. MEDIANA CoLtd | SK IE vs. Tway Air Co | SK IE vs. Digital Multimedia Technology | SK IE vs. Nasmedia 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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