Correlation Between Weichai Heavy and Dow Jones
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By analyzing existing cross correlation between Weichai Heavy Machinery and Dow Jones Industrial, you can compare the effects of market volatilities on Weichai Heavy 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 Weichai Heavy with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Heavy and Dow Jones.
Diversification Opportunities for Weichai Heavy and Dow Jones
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weichai and Dow is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Heavy Machinery 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 Weichai Heavy 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 Weichai Heavy Machinery 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 Weichai Heavy i.e., Weichai Heavy and Dow Jones go up and down completely randomly.
Pair Corralation between Weichai Heavy and Dow Jones
Assuming the 90 days trading horizon Weichai Heavy Machinery is expected to generate 5.61 times more return on investment than Dow Jones. However, Weichai Heavy is 5.61 times more volatile than Dow Jones Industrial. It trades about 0.12 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of risk. If you would invest 1,118 in Weichai Heavy Machinery on August 28, 2024 and sell it today you would earn a total of 131.00 from holding Weichai Heavy Machinery or generate 11.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weichai Heavy Machinery vs. Dow Jones Industrial
Performance |
| Timeline |
Weichai Heavy and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Weichai Heavy Machinery
Pair trading matchups for Weichai Heavy
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Weichai Heavy and Dow Jones
The main advantage of trading using opposite Weichai Heavy and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Heavy 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.| Weichai Heavy vs. China Asset Management | Weichai Heavy vs. Harvest Fund Management | Weichai Heavy vs. JCHX Mining Management | Weichai Heavy vs. AVIC Fund Management |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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