Correlation Between Dow Jones and Guangzhou Zhujiang
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By analyzing existing cross correlation between Dow Jones Industrial and Guangzhou Zhujiang Brewery, you can compare the effects of market volatilities on Dow Jones and Guangzhou Zhujiang 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 Guangzhou Zhujiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Guangzhou Zhujiang.
Diversification Opportunities for Dow Jones and Guangzhou Zhujiang
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and Guangzhou is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Guangzhou Zhujiang Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Zhujiang 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 Guangzhou Zhujiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Zhujiang has no effect on the direction of Dow Jones i.e., Dow Jones and Guangzhou Zhujiang go up and down completely randomly.
Pair Corralation between Dow Jones and Guangzhou Zhujiang
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Guangzhou Zhujiang. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 1.75 times less risky than Guangzhou Zhujiang. The index trades about -0.22 of its potential returns per unit of risk. The Guangzhou Zhujiang Brewery is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 913.00 in Guangzhou Zhujiang Brewery on November 27, 2024 and sell it today you would earn a total of 12.00 from holding Guangzhou Zhujiang Brewery or generate 1.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 75.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Guangzhou Zhujiang Brewery
Performance |
| Timeline |
Dow Jones and Guangzhou Zhujiang Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Guangzhou Zhujiang Brewery
Pair trading matchups for Guangzhou Zhujiang
Pair Trading with Dow Jones and Guangzhou Zhujiang
The main advantage of trading using opposite Dow Jones and Guangzhou Zhujiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Guangzhou Zhujiang 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 Guangzhou Zhujiang will offset losses from the drop in Guangzhou Zhujiang's long position.The idea behind Dow Jones Industrial and Guangzhou Zhujiang Brewery pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Guangzhou Zhujiang vs. Vanfund Urban Investment | Guangzhou Zhujiang vs. Suzhou Xingye Material | Guangzhou Zhujiang vs. Metro Investment Development | Guangzhou Zhujiang vs. Western Metal Materials |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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