Correlation Between Dow Jones and Xinjiang Zhongtai
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By analyzing existing cross correlation between Dow Jones Industrial and Xinjiang Zhongtai Chemical, you can compare the effects of market volatilities on Dow Jones and Xinjiang Zhongtai 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 Xinjiang Zhongtai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Xinjiang Zhongtai.
Diversification Opportunities for Dow Jones and Xinjiang Zhongtai
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Xinjiang is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Xinjiang Zhongtai Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Zhongtai 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 Xinjiang Zhongtai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Zhongtai has no effect on the direction of Dow Jones i.e., Dow Jones and Xinjiang Zhongtai go up and down completely randomly.
Pair Corralation between Dow Jones and Xinjiang Zhongtai
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.08 times less return on investment than Xinjiang Zhongtai. But when comparing it to its historical volatility, Dow Jones Industrial is 2.51 times less risky than Xinjiang Zhongtai. It trades about 0.34 of its potential returns per unit of risk. Xinjiang Zhongtai Chemical is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 406.00 in Xinjiang Zhongtai Chemical on September 5, 2024 and sell it today you would earn a total of 62.00 from holding Xinjiang Zhongtai Chemical or generate 15.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dow Jones Industrial vs. Xinjiang Zhongtai Chemical
Performance |
| Timeline |
Dow Jones and Xinjiang Zhongtai Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Xinjiang Zhongtai Chemical
Pair trading matchups for Xinjiang Zhongtai
Pair Trading with Dow Jones and Xinjiang Zhongtai
The main advantage of trading using opposite Dow Jones and Xinjiang Zhongtai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Xinjiang Zhongtai 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 Xinjiang Zhongtai will offset losses from the drop in Xinjiang Zhongtai's long position.| Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
| Xinjiang Zhongtai vs. Zijin Mining Group | Xinjiang Zhongtai vs. Wanhua Chemical Group | Xinjiang Zhongtai vs. Baoshan Iron Steel | Xinjiang Zhongtai vs. Shandong Gold Mining |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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