Correlation Between Dow Jones and HLB Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Dow Jones and HLB Pharmaceutical at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dow Jones and HLB Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and HLB Pharmaceutical Co, you can compare the effects of market volatilities on Dow Jones and HLB Pharmaceutical 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 HLB Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and HLB Pharmaceutical.
Diversification Opportunities for Dow Jones and HLB Pharmaceutical
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and HLB is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and HLB Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HLB Pharmaceutical 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 HLB Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HLB Pharmaceutical has no effect on the direction of Dow Jones i.e., Dow Jones and HLB Pharmaceutical go up and down completely randomly.
Pair Corralation between Dow Jones and HLB Pharmaceutical
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.18 times less return on investment than HLB Pharmaceutical. But when comparing it to its historical volatility, Dow Jones Industrial is 7.31 times less risky than HLB Pharmaceutical. It trades about 0.37 of its potential returns per unit of risk. HLB Pharmaceutical Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,954,000 in HLB Pharmaceutical Co on September 1, 2024 and sell it today you would earn a total of 271,000 from holding HLB Pharmaceutical Co or generate 13.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Dow Jones Industrial vs. HLB Pharmaceutical Co
Performance |
| Timeline |
Dow Jones and HLB Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
HLB Pharmaceutical Co
Pair trading matchups for HLB Pharmaceutical
Pair Trading with Dow Jones and HLB Pharmaceutical
The main advantage of trading using opposite Dow Jones and HLB Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, HLB Pharmaceutical 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 HLB Pharmaceutical will offset losses from the drop in HLB Pharmaceutical's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| HLB Pharmaceutical vs. Kolon Life Science | HLB Pharmaceutical vs. JETEMA Co | HLB Pharmaceutical vs. Aminologics CoLtd | HLB Pharmaceutical vs. Daihan Pharmaceutical CoLtd |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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