Correlation Between Akva and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Akva 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 Akva and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akva Group and Dow Jones Industrial, you can compare the effects of market volatilities on Akva 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 Akva with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akva and Dow Jones.
Diversification Opportunities for Akva and Dow Jones
Poor diversification
The 3 months correlation between Akva and Dow is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Akva 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 Akva 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 Akva 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 Akva i.e., Akva and Dow Jones go up and down completely randomly.
Pair Corralation between Akva and Dow Jones
Assuming the 90 days trading horizon Akva Group is expected to generate 1.95 times more return on investment than Dow Jones. However, Akva is 1.95 times more volatile than Dow Jones Industrial. It trades about 0.28 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.38 per unit of risk. If you would invest 6,300 in Akva Group on September 3, 2024 and sell it today you would earn a total of 700.00 from holding Akva Group or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Akva Group vs. Dow Jones Industrial
Performance |
| Timeline |
Akva and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Akva Group
Pair trading matchups for Akva
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Akva and Dow Jones
The main advantage of trading using opposite Akva and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akva 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.| Akva vs. Austevoll Seafood ASA | Akva vs. Grieg Seafood ASA | Akva vs. Lery Seafood Group | Akva vs. SalMar ASA |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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