Correlation Between Daekyung Machinery and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Daekyung Machinery and Dow Jones 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 Daekyung Machinery and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daekyung Machinery Engineering and Dow Jones Industrial, you can compare the effects of market volatilities on Daekyung Machinery and Dow Jones 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 Daekyung Machinery with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daekyung Machinery and Dow Jones.
Diversification Opportunities for Daekyung Machinery and Dow Jones
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Daekyung and Dow is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Daekyung Machinery Engineering and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Daekyung Machinery 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 Daekyung Machinery Engineering are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Daekyung Machinery i.e., Daekyung Machinery and Dow Jones go up and down completely randomly.
Pair Corralation between Daekyung Machinery and Dow Jones
Assuming the 90 days trading horizon Daekyung Machinery Engineering is expected to generate 4.52 times more return on investment than Dow Jones. However, Daekyung Machinery is 4.52 times more volatile than Dow Jones Industrial. It trades about 0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.24 per unit of risk. If you would invest 44,000 in Daekyung Machinery Engineering on September 6, 2024 and sell it today you would earn a total of 7,500 from holding Daekyung Machinery Engineering or generate 17.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 82.81% |
Values | Daily Returns |
Daekyung Machinery Engineering vs. Dow Jones Industrial
Performance |
Timeline |
Daekyung Machinery and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Daekyung Machinery Engineering
Pair trading matchups for Daekyung Machinery
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Daekyung Machinery and Dow Jones
The main advantage of trading using opposite Daekyung Machinery and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daekyung Machinery position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.Daekyung Machinery vs. Youngsin Metal Industrial | Daekyung Machinery vs. Hanjoo Light Metal | Daekyung Machinery vs. Hankook Furniture Co | Daekyung Machinery vs. Haitai Confectionery Foods |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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