Correlation Between Dazhong Transportation and Dow Jones
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By analyzing existing cross correlation between Dazhong Transportation Group and Dow Jones Industrial, you can compare the effects of market volatilities on Dazhong Transportation 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 Dazhong Transportation with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dazhong Transportation and Dow Jones.
Diversification Opportunities for Dazhong Transportation and Dow Jones
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dazhong and Dow is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dazhong Transportation 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 Dazhong Transportation 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 Dazhong Transportation 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 Dazhong Transportation i.e., Dazhong Transportation and Dow Jones go up and down completely randomly.
Pair Corralation between Dazhong Transportation and Dow Jones
Assuming the 90 days trading horizon Dazhong Transportation is expected to generate 1.29 times less return on investment than Dow Jones. In addition to that, Dazhong Transportation is 3.68 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 0.08 per unit of volatility. If you would invest 3,394,710 in Dow Jones Industrial on August 25, 2024 and sell it today you would earn a total of 1,034,941 from holding Dow Jones Industrial or generate 30.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.18% |
| Values | Daily Returns |
Dazhong Transportation Group vs. Dow Jones Industrial
Performance |
| Timeline |
Dazhong Transportation and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Dazhong Transportation Group
Pair trading matchups for Dazhong Transportation
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Dazhong Transportation and Dow Jones
The main advantage of trading using opposite Dazhong Transportation and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dazhong Transportation 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.The idea behind Dazhong Transportation Group and Dow Jones Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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