Correlation Between Powertech Industrial and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Powertech Industrial 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 Powertech Industrial and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powertech Industrial Co and Dow Jones Industrial, you can compare the effects of market volatilities on Powertech Industrial 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 Powertech Industrial with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powertech Industrial and Dow Jones.
Diversification Opportunities for Powertech Industrial and Dow Jones
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Powertech and Dow is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Powertech Industrial 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 Powertech Industrial 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 Powertech Industrial 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 Powertech Industrial i.e., Powertech Industrial and Dow Jones go up and down completely randomly.
Pair Corralation between Powertech Industrial and Dow Jones
Assuming the 90 days trading horizon Powertech Industrial Co is expected to generate 3.5 times more return on investment than Dow Jones. However, Powertech Industrial is 3.5 times more volatile than Dow Jones Industrial. It trades about 0.07 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of risk. If you would invest 2,800 in Powertech Industrial Co on August 30, 2024 and sell it today you would earn a total of 205.00 from holding Powertech Industrial Co or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Powertech Industrial Co vs. Dow Jones Industrial
Performance |
| Timeline |
Powertech Industrial and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Powertech Industrial Co
Pair trading matchups for Powertech Industrial
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Powertech Industrial and Dow Jones
The main advantage of trading using opposite Powertech Industrial and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powertech Industrial 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.| Powertech Industrial vs. Yulon Motor Co | Powertech Industrial vs. Far Eastern Department | Powertech Industrial vs. China Steel Corp | Powertech Industrial vs. Chang Hwa Commercial |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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