Correlation Between Asia Hotel and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Asia Hotel 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 Asia Hotel and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Hotel Public and Dow Jones Industrial, you can compare the effects of market volatilities on Asia Hotel 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 Asia Hotel with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Hotel and Dow Jones.
Diversification Opportunities for Asia Hotel and Dow Jones
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Asia and Dow is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Asia Hotel Public 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 Asia Hotel 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 Asia Hotel Public 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 Asia Hotel i.e., Asia Hotel and Dow Jones go up and down completely randomly.
Pair Corralation between Asia Hotel and Dow Jones
Assuming the 90 days trading horizon Asia Hotel Public is expected to under-perform the Dow Jones. But the stock apears to be less risky and, when comparing its historical volatility, Asia Hotel Public is 1.08 times less risky than Dow Jones. The stock trades about -0.04 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Asia Hotel Public vs. Dow Jones Industrial
Performance |
| Timeline |
Asia Hotel and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Asia Hotel Public
Pair trading matchups for Asia Hotel
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Asia Hotel and Dow Jones
The main advantage of trading using opposite Asia Hotel and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Hotel 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.| Asia Hotel vs. TRC Construction Public | Asia Hotel vs. Bangkok Expressway and | Asia Hotel vs. Lohakit Metal Public | Asia Hotel vs. Gunkul Engineering Public |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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