Correlation Between Dow Jones and Shandong Hongchuang
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By analyzing existing cross correlation between Dow Jones Industrial and Shandong Hongchuang Aluminum, you can compare the effects of market volatilities on Dow Jones and Shandong Hongchuang 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 Shandong Hongchuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Shandong Hongchuang.
Diversification Opportunities for Dow Jones and Shandong Hongchuang
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Shandong is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Shandong Hongchuang Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Hongchuang 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 Shandong Hongchuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Hongchuang has no effect on the direction of Dow Jones i.e., Dow Jones and Shandong Hongchuang go up and down completely randomly.
Pair Corralation between Dow Jones and Shandong Hongchuang
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.65 times less return on investment than Shandong Hongchuang. But when comparing it to its historical volatility, Dow Jones Industrial is 5.78 times less risky than Shandong Hongchuang. It trades about 0.34 of its potential returns per unit of risk. Shandong Hongchuang Aluminum is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 897.00 in Shandong Hongchuang Aluminum on November 3, 2024 and sell it today you would earn a total of 144.00 from holding Shandong Hongchuang Aluminum or generate 16.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Shandong Hongchuang Aluminum
Performance |
| Timeline |
Dow Jones and Shandong Hongchuang Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Shandong Hongchuang Aluminum
Pair trading matchups for Shandong Hongchuang
Pair Trading with Dow Jones and Shandong Hongchuang
The main advantage of trading using opposite Dow Jones and Shandong Hongchuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Shandong Hongchuang 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 Shandong Hongchuang will offset losses from the drop in Shandong Hongchuang's long position.| Dow Jones vs. Cincinnati Financial | Dow Jones vs. Kellanova | Dow Jones vs. Acme United | Dow Jones vs. Procter Gamble |
| Shandong Hongchuang vs. Eastern Communications Co | Shandong Hongchuang vs. Qtone Education Group | Shandong Hongchuang vs. Sinomach Automobile Co | Shandong Hongchuang vs. Wintao Communications 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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