Correlation Between Guangzhou Restaurants and Dow Jones
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By analyzing existing cross correlation between Guangzhou Restaurants Group and Dow Jones Industrial, you can compare the effects of market volatilities on Guangzhou Restaurants 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 Guangzhou Restaurants with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Restaurants and Dow Jones.
Diversification Opportunities for Guangzhou Restaurants and Dow Jones
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Guangzhou and Dow is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Restaurants Group 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 Guangzhou Restaurants 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 Guangzhou Restaurants Group 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 Guangzhou Restaurants i.e., Guangzhou Restaurants and Dow Jones go up and down completely randomly.
Pair Corralation between Guangzhou Restaurants and Dow Jones
Assuming the 90 days trading horizon Guangzhou Restaurants is expected to generate 7.99 times less return on investment than Dow Jones. In addition to that, Guangzhou Restaurants is 1.81 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 0.29 per unit of volatility. If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 258,052 from holding Dow Jones Industrial or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Restaurants Group vs. Dow Jones Industrial
Performance |
| Timeline |
Guangzhou Restaurants and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Guangzhou Restaurants Group
Pair trading matchups for Guangzhou Restaurants
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Guangzhou Restaurants and Dow Jones
The main advantage of trading using opposite Guangzhou Restaurants and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Restaurants 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.| Guangzhou Restaurants vs. Chinese Universe Publishing | Guangzhou Restaurants vs. Qingdao Foods Co | Guangzhou Restaurants vs. HaiXin Foods Co | Guangzhou Restaurants vs. Xiamen Jihong Package |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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