Correlation Between Advance Information and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Advance Information 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 Advance Information and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advance Information Marketing and Dow Jones Industrial, you can compare the effects of market volatilities on Advance Information 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 Advance Information with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Information and Dow Jones.
Diversification Opportunities for Advance Information and Dow Jones
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Advance and Dow is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Advance Information Marketing 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 Advance Information 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 Advance Information Marketing 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 Advance Information i.e., Advance Information and Dow Jones go up and down completely randomly.
Pair Corralation between Advance Information and Dow Jones
Assuming the 90 days trading horizon Advance Information Marketing is expected to generate 16.83 times more return on investment than Dow Jones. However, Advance Information is 16.83 times more volatile than Dow Jones Industrial. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 15.00 in Advance Information Marketing on November 5, 2024 and sell it today you would lose (8.00) from holding Advance Information Marketing or give up 53.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 89.29% |
| Values | Daily Returns |
Advance Information Marketing vs. Dow Jones Industrial
Performance |
| Timeline |
Advance Information and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Advance Information Marketing
Pair trading matchups for Advance Information
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Advance Information and Dow Jones
The main advantage of trading using opposite Advance Information and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advance Information 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.| Advance Information vs. ES Ceramics Technology | Advance Information vs. Awanbiru Technology Bhd | Advance Information vs. Computer Forms Bhd | Advance Information vs. Uchi Technologies Bhd |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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