Correlation Between Promate Electronic and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Promate Electronic 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 Promate Electronic and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Promate Electronic Co and Dow Jones Industrial, you can compare the effects of market volatilities on Promate Electronic 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 Promate Electronic with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Promate Electronic and Dow Jones.
Diversification Opportunities for Promate Electronic and Dow Jones
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Promate and Dow is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Promate Electronic 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 Promate Electronic 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 Promate Electronic 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 Promate Electronic i.e., Promate Electronic and Dow Jones go up and down completely randomly.
Pair Corralation between Promate Electronic and Dow Jones
Assuming the 90 days trading horizon Promate Electronic Co is expected to under-perform the Dow Jones. In addition to that, Promate Electronic is 1.37 times more volatile than Dow Jones Industrial. It trades about -0.09 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of volatility. If you would invest 4,238,757 in Dow Jones Industrial on October 26, 2024 and sell it today you would earn a total of 217,750 from holding Dow Jones Industrial or generate 5.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Promate Electronic Co vs. Dow Jones Industrial
Performance |
| Timeline |
Promate Electronic and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Promate Electronic Co
Pair trading matchups for Promate Electronic
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Promate Electronic and Dow Jones
The main advantage of trading using opposite Promate Electronic and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Promate Electronic 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.| Promate Electronic vs. WPG Holdings | Promate Electronic vs. Topco Scientific Co | Promate Electronic vs. E Life Mall Corp | Promate Electronic vs. Lumax International Corp |
| Dow Jones vs. Asure Software | Dow Jones vs. Amkor Technology | Dow Jones vs. Radcom | Dow Jones vs. Senmiao Technology |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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