Correlation Between Liaoning Port and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Liaoning Port 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 Liaoning Port and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liaoning Port CoLtd and Dow Jones Industrial, you can compare the effects of market volatilities on Liaoning Port 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 Liaoning Port with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liaoning Port and Dow Jones.
Diversification Opportunities for Liaoning Port and Dow Jones
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Liaoning and Dow is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Liaoning Port CoLtd 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 Liaoning Port 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 Liaoning Port CoLtd 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 Liaoning Port i.e., Liaoning Port and Dow Jones go up and down completely randomly.
Pair Corralation between Liaoning Port and Dow Jones
Assuming the 90 days horizon Liaoning Port is expected to generate 3.5 times less return on investment than Dow Jones. In addition to that, Liaoning Port is 1.75 times more volatile than Dow Jones Industrial. It trades about 0.06 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.36 per unit of volatility. If you would invest 4,179,460 in Dow Jones Industrial on September 4, 2024 and sell it today you would earn a total of 298,740 from holding Dow Jones Industrial or generate 7.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Liaoning Port CoLtd vs. Dow Jones Industrial
Performance |
| Timeline |
Liaoning Port and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Liaoning Port CoLtd
Pair trading matchups for Liaoning Port
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Liaoning Port and Dow Jones
The main advantage of trading using opposite Liaoning Port and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liaoning Port 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.| Liaoning Port vs. Superior Plus Corp | Liaoning Port vs. NMI Holdings | Liaoning Port vs. Origin Agritech | Liaoning Port vs. SIVERS SEMICONDUCTORS AB |
| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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