Correlation Between HUA YU and Dow Jones
Can any of the company-specific risk be diversified away by investing in both HUA YU 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 HUA YU and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HUA YU LIEN and Dow Jones Industrial, you can compare the effects of market volatilities on HUA YU 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 HUA YU with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUA YU and Dow Jones.
Diversification Opportunities for HUA YU and Dow Jones
Pay attention - limited upside
The 3 months correlation between HUA and Dow is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding HUA YU LIEN 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 HUA YU 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 HUA YU LIEN 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 HUA YU i.e., HUA YU and Dow Jones go up and down completely randomly.
Pair Corralation between HUA YU and Dow Jones
Assuming the 90 days trading horizon HUA YU LIEN is expected to generate 4.51 times more return on investment than Dow Jones. However, HUA YU is 4.51 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.13 per unit of risk. If you would invest 7,790 in HUA YU LIEN on September 5, 2024 and sell it today you would earn a total of 4,560 from holding HUA YU LIEN or generate 58.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.98% |
| Values | Daily Returns |
HUA YU LIEN vs. Dow Jones Industrial
Performance |
| Timeline |
HUA YU and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
HUA YU LIEN
Pair trading matchups for HUA YU
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with HUA YU and Dow Jones
The main advantage of trading using opposite HUA YU and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUA YU 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.| HUA YU vs. Advancetek Enterprise Co | HUA YU vs. GTM Holdings Corp | HUA YU vs. De Licacy Industrial | HUA YU vs. Shinkong Textile Co |
| Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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