Correlation Between Powertech Technology and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Powertech Technology 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 Technology 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 Technology and Dow Jones Industrial, you can compare the effects of market volatilities on Powertech Technology 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 Technology with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powertech Technology and Dow Jones.
Diversification Opportunities for Powertech Technology and Dow Jones
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Powertech and Dow is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Powertech 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 Powertech Technology 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 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 Powertech Technology i.e., Powertech Technology and Dow Jones go up and down completely randomly.
Pair Corralation between Powertech Technology and Dow Jones
Assuming the 90 days trading horizon Powertech Technology is expected to generate 1.33 times less return on investment than Dow Jones. In addition to that, Powertech Technology is 3.46 times more volatile than Dow Jones Industrial. It trades about 0.03 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.13 per unit of volatility. If you would invest 3,620,444 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 865,587 from holding Dow Jones Industrial or generate 23.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.19% |
| Values | Daily Returns |
Powertech Technology vs. Dow Jones Industrial
Performance |
| Timeline |
Powertech Technology and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Powertech Technology
Pair trading matchups for Powertech Technology
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Powertech Technology and Dow Jones
The main advantage of trading using opposite Powertech Technology and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powertech Technology 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 Technology vs. Novatek Microelectronics Corp | Powertech Technology vs. King Yuan Electronics | Powertech Technology vs. Realtek Semiconductor Corp | Powertech Technology vs. Nanya Technology Corp |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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