Correlation Between Danhua Chemical and Dow Jones
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By analyzing existing cross correlation between Danhua Chemical Technology and Dow Jones Industrial, you can compare the effects of market volatilities on Danhua Chemical 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 Danhua Chemical with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danhua Chemical and Dow Jones.
Diversification Opportunities for Danhua Chemical and Dow Jones
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Danhua and Dow is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Danhua Chemical Technology 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 Danhua Chemical 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 Danhua Chemical Technology 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 Danhua Chemical i.e., Danhua Chemical and Dow Jones go up and down completely randomly.
Pair Corralation between Danhua Chemical and Dow Jones
Assuming the 90 days trading horizon Danhua Chemical is expected to generate 1.25 times less return on investment than Dow Jones. In addition to that, Danhua Chemical is 4.26 times more volatile than Dow Jones Industrial. It trades about 0.02 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of volatility. If you would invest 3,302,749 in Dow Jones Industrial on September 12, 2024 and sell it today you would earn a total of 1,122,034 from holding Dow Jones Industrial or generate 33.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.56% |
| Values | Daily Returns |
Danhua Chemical Technology vs. Dow Jones Industrial
Performance |
| Timeline |
Danhua Chemical and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Danhua Chemical Technology
Pair trading matchups for Danhua Chemical
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Danhua Chemical and Dow Jones
The main advantage of trading using opposite Danhua Chemical and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danhua Chemical 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.| Danhua Chemical vs. Super Dragon Engineering Plastics | Danhua Chemical vs. Fuda Alloy Materials | Danhua Chemical vs. Harvest Fund Management | Danhua Chemical vs. Xinke Material |
| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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