Correlation Between Dow Jones and Cathay Biotech
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By analyzing existing cross correlation between Dow Jones Industrial and Cathay Biotech, you can compare the effects of market volatilities on Dow Jones and Cathay Biotech 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 Cathay Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Cathay Biotech.
Diversification Opportunities for Dow Jones and Cathay Biotech
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Cathay is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Cathay Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Biotech 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 Cathay Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Biotech has no effect on the direction of Dow Jones i.e., Dow Jones and Cathay Biotech go up and down completely randomly.
Pair Corralation between Dow Jones and Cathay Biotech
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.24 times more return on investment than Cathay Biotech. However, Dow Jones Industrial is 4.14 times less risky than Cathay Biotech. It trades about 0.09 of its potential returns per unit of risk. Cathay Biotech is currently generating about -0.01 per unit of risk. If you would invest 3,755,792 in Dow Jones Industrial on September 14, 2024 and sell it today you would earn a total of 635,620 from holding Dow Jones Industrial or generate 16.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.97% |
| Values | Daily Returns |
Dow Jones Industrial vs. Cathay Biotech
Performance |
| Timeline |
Dow Jones and Cathay Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Cathay Biotech
Pair trading matchups for Cathay Biotech
Pair Trading with Dow Jones and Cathay Biotech
The main advantage of trading using opposite Dow Jones and Cathay Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Cathay Biotech 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 Cathay Biotech will offset losses from the drop in Cathay Biotech's long position.| Dow Jones vs. Hurco Companies | Dow Jones vs. Tyson Foods | Dow Jones vs. MYR Group | Dow Jones vs. Cannae Holdings |
| Cathay Biotech vs. Suofeiya Home Collection | Cathay Biotech vs. Meinian Onehealth Healthcare | Cathay Biotech vs. Dezhan HealthCare Co | Cathay Biotech vs. PKU HealthCare Corp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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