Correlation Between First Hotel and Dow Jones
Can any of the company-specific risk be diversified away by investing in both First Hotel 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 First Hotel and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hotel Co and Dow Jones Industrial, you can compare the effects of market volatilities on First Hotel 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 First Hotel with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hotel and Dow Jones.
Diversification Opportunities for First Hotel and Dow Jones
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Dow is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding First Hotel Co 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 First Hotel 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 First Hotel Co 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 First Hotel i.e., First Hotel and Dow Jones go up and down completely randomly.
Pair Corralation between First Hotel and Dow Jones
Assuming the 90 days trading horizon First Hotel Co is expected to under-perform the Dow Jones. In addition to that, First Hotel is 1.6 times more volatile than Dow Jones Industrial. It trades about -0.05 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of volatility. If you would invest 3,387,678 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 1,103,387 from holding Dow Jones Industrial or generate 32.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
First Hotel Co vs. Dow Jones Industrial
Performance |
| Timeline |
First Hotel and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
First Hotel Co
Pair trading matchups for First Hotel
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with First Hotel and Dow Jones
The main advantage of trading using opposite First Hotel and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hotel 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.| First Hotel vs. Leofoo Development Co | First Hotel vs. Hotel Holiday Garden | First Hotel vs. Shin Shin Co | First Hotel vs. Hung Sheng Construction |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |