Correlation Between Tien Son and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Tien Son 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 Tien Son and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tien Son Thanh and Dow Jones Industrial, you can compare the effects of market volatilities on Tien Son 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 Tien Son with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tien Son and Dow Jones.
Diversification Opportunities for Tien Son and Dow Jones
Pay attention - limited upside
The 3 months correlation between Tien and Dow is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Tien Son Thanh 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 Tien Son 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 Tien Son Thanh 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 Tien Son i.e., Tien Son and Dow Jones go up and down completely randomly.
Pair Corralation between Tien Son and Dow Jones
Assuming the 90 days trading horizon Tien Son Thanh is expected to under-perform the Dow Jones. In addition to that, Tien Son is 2.98 times more volatile than Dow Jones Industrial. It trades about -0.04 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 3,347,646 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 1,124,560 from holding Dow Jones Industrial or generate 33.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Tien Son Thanh vs. Dow Jones Industrial
Performance |
| Timeline |
Tien Son and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Tien Son Thanh
Pair trading matchups for Tien Son
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Tien Son and Dow Jones
The main advantage of trading using opposite Tien Son and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tien Son 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.| Tien Son vs. VTC Telecommunications JSC | Tien Son vs. Fecon Mining JSC | Tien Son vs. BaoMinh Insurance Corp | Tien Son vs. Petrolimex Insurance Corp |
| Dow Jones vs. Skillful Craftsman Education | Dow Jones vs. Acco Brands | Dow Jones vs. Cracker Barrel Old | Dow Jones vs. Coursera |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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