Correlation Between Dow Jones and Beijing Lier
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By analyzing existing cross correlation between Dow Jones Industrial and Beijing Lier High, you can compare the effects of market volatilities on Dow Jones and Beijing Lier 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 Beijing Lier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Beijing Lier.
Diversification Opportunities for Dow Jones and Beijing Lier
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Beijing is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Beijing Lier High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Lier High 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 Beijing Lier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Lier High has no effect on the direction of Dow Jones i.e., Dow Jones and Beijing Lier go up and down completely randomly.
Pair Corralation between Dow Jones and Beijing Lier
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.56 times less return on investment than Beijing Lier. But when comparing it to its historical volatility, Dow Jones Industrial is 3.66 times less risky than Beijing Lier. It trades about 0.16 of its potential returns per unit of risk. Beijing Lier High is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 336.00 in Beijing Lier High on September 3, 2024 and sell it today you would earn a total of 129.00 from holding Beijing Lier High or generate 38.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.8% |
| Values | Daily Returns |
Dow Jones Industrial vs. Beijing Lier High
Performance |
| Timeline |
Dow Jones and Beijing Lier Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Beijing Lier High
Pair trading matchups for Beijing Lier
Pair Trading with Dow Jones and Beijing Lier
The main advantage of trading using opposite Dow Jones and Beijing Lier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Beijing Lier 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 Beijing Lier will offset losses from the drop in Beijing Lier's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Beijing Lier vs. Maoming Petro Chemical Shihua | Beijing Lier vs. Yili Chuanning Biotechnology | Beijing Lier vs. Dymatic Chemicals | Beijing Lier vs. Hubei Dinglong Chemical |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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