Correlation Between Dow Jones and Shanghai Broadband
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By analyzing existing cross correlation between Dow Jones Industrial and Shanghai Broadband Technology, you can compare the effects of market volatilities on Dow Jones and Shanghai Broadband 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 Shanghai Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Shanghai Broadband.
Diversification Opportunities for Dow Jones and Shanghai Broadband
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Shanghai is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Shanghai Broadband Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Broadband 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 Shanghai Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Broadband has no effect on the direction of Dow Jones i.e., Dow Jones and Shanghai Broadband go up and down completely randomly.
Pair Corralation between Dow Jones and Shanghai Broadband
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.72 times less return on investment than Shanghai Broadband. But when comparing it to its historical volatility, Dow Jones Industrial is 2.68 times less risky than Shanghai Broadband. It trades about 0.37 of its potential returns per unit of risk. Shanghai Broadband Technology is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 335.00 in Shanghai Broadband Technology on September 1, 2024 and sell it today you would earn a total of 75.00 from holding Shanghai Broadband Technology or generate 22.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Shanghai Broadband Technology
Performance |
| Timeline |
Dow Jones and Shanghai Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Shanghai Broadband Technology
Pair trading matchups for Shanghai Broadband
Pair Trading with Dow Jones and Shanghai Broadband
The main advantage of trading using opposite Dow Jones and Shanghai Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Shanghai Broadband 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 Shanghai Broadband will offset losses from the drop in Shanghai Broadband's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Shanghai Broadband vs. Zijin Mining Group | Shanghai Broadband vs. Wanhua Chemical Group | Shanghai Broadband vs. Baoshan Iron Steel | Shanghai Broadband vs. Shandong Gold Mining |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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