Correlation Between Dow Jones and Lihtai Construction
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Lihtai Construction 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 Lihtai Construction 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 Lihtai Construction Enterprise, you can compare the effects of market volatilities on Dow Jones and Lihtai Construction 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 Lihtai Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Lihtai Construction.
Diversification Opportunities for Dow Jones and Lihtai Construction
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dow and Lihtai is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Lihtai Construction Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lihtai Construction 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 Lihtai Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lihtai Construction has no effect on the direction of Dow Jones i.e., Dow Jones and Lihtai Construction go up and down completely randomly.
Pair Corralation between Dow Jones and Lihtai Construction
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Lihtai Construction. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 1.02 times less risky than Lihtai Construction. The index trades about -0.19 of its potential returns per unit of risk. The Lihtai Construction Enterprise is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 8,230 in Lihtai Construction Enterprise on November 28, 2024 and sell it today you would earn a total of 300.00 from holding Lihtai Construction Enterprise or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 80.95% |
| Values | Daily Returns |
Dow Jones Industrial vs. Lihtai Construction Enterprise
Performance |
| Timeline |
Dow Jones and Lihtai Construction Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Lihtai Construction Enterprise
Pair trading matchups for Lihtai Construction
Pair Trading with Dow Jones and Lihtai Construction
The main advantage of trading using opposite Dow Jones and Lihtai Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Lihtai Construction 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 Lihtai Construction will offset losses from the drop in Lihtai Construction's long position.| Dow Jones vs. Gladstone Investment | Dow Jones vs. BW Offshore Limited | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. Aperture Health |
| Lihtai Construction vs. Ruentex Development Co | Lihtai Construction vs. Ruentex Industries | Lihtai Construction vs. Ruentex Engineering Construction | Lihtai Construction vs. Feng Tay Enterprises |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |