Correlation Between Shanghai and Dow Jones
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By analyzing existing cross correlation between Shanghai MG Stationery and Dow Jones Industrial, you can compare the effects of market volatilities on Shanghai 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 Shanghai with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai and Dow Jones.
Diversification Opportunities for Shanghai and Dow Jones
Poor diversification
The 3 months correlation between Shanghai and Dow is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai MG Stationery 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 Shanghai 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 Shanghai MG Stationery 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 Shanghai i.e., Shanghai and Dow Jones go up and down completely randomly.
Pair Corralation between Shanghai and Dow Jones
Assuming the 90 days trading horizon Shanghai MG Stationery is expected to under-perform the Dow Jones. In addition to that, Shanghai is 3.57 times more volatile than Dow Jones Industrial. It trades about -0.01 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of volatility. If you would invest 3,880,733 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 610,332 from holding Dow Jones Industrial or generate 15.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.8% |
| Values | Daily Returns |
Shanghai MG Stationery vs. Dow Jones Industrial
Performance |
| Timeline |
Shanghai and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Shanghai MG Stationery
Pair trading matchups for Shanghai
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Shanghai and Dow Jones
The main advantage of trading using opposite Shanghai and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai 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.| Shanghai vs. Hainan Airlines Co | Shanghai vs. Zhangjiagang Freetrade Science | Shanghai vs. Jinyu Bio Technology Co | Shanghai vs. Hubei Forbon Technology |
| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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