Correlation Between Dow Jones and Huadong Medicine
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By analyzing existing cross correlation between Dow Jones Industrial and Huadong Medicine Co, you can compare the effects of market volatilities on Dow Jones and Huadong Medicine 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 Dow Jones with a short position of Huadong Medicine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Huadong Medicine.
Diversification Opportunities for Dow Jones and Huadong Medicine
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Huadong is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Huadong Medicine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huadong Medicine and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Huadong Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huadong Medicine has no effect on the direction of Dow Jones i.e., Dow Jones and Huadong Medicine go up and down completely randomly.
Pair Corralation between Dow Jones and Huadong Medicine
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.35 times more return on investment than Huadong Medicine. However, Dow Jones Industrial is 2.84 times less risky than Huadong Medicine. It trades about 0.07 of its potential returns per unit of risk. Huadong Medicine Co is currently generating about -0.03 per unit of risk. If you would invest 3,373,396 in Dow Jones Industrial on October 15, 2024 and sell it today you would earn a total of 820,449 from holding Dow Jones Industrial or generate 24.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.37% |
| Values | Daily Returns |
Dow Jones Industrial vs. Huadong Medicine Co
Performance |
| Timeline |
Dow Jones and Huadong Medicine Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Huadong Medicine Co
Pair trading matchups for Huadong Medicine
Pair Trading with Dow Jones and Huadong Medicine
The main advantage of trading using opposite Dow Jones and Huadong Medicine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Huadong Medicine 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 Huadong Medicine will offset losses from the drop in Huadong Medicine's long position.| Dow Jones vs. LB Foster | Dow Jones vs. Definitive Healthcare Corp | Dow Jones vs. TFI International | Dow Jones vs. Ryanair Holdings PLC |
| Huadong Medicine vs. Jiahe Foods Industry | Huadong Medicine vs. V V Food | Huadong Medicine vs. Shanghai Ziyan Foods | Huadong Medicine vs. Heilongjiang Transport Development |
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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