Correlation Between Dow Jones and Asia Precision
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Asia Precision 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 Asia Precision 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 Asia Precision Public, you can compare the effects of market volatilities on Dow Jones and Asia Precision 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 Asia Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Asia Precision.
Diversification Opportunities for Dow Jones and Asia Precision
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dow and Asia is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Asia Precision Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Precision Public 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 Asia Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Precision Public has no effect on the direction of Dow Jones i.e., Dow Jones and Asia Precision go up and down completely randomly.
Pair Corralation between Dow Jones and Asia Precision
Assuming the 90 days trading horizon Dow Jones is expected to generate 29.36 times less return on investment than Asia Precision. But when comparing it to its historical volatility, Dow Jones Industrial is 78.33 times less risky than Asia Precision. It trades about 0.12 of its potential returns per unit of risk. Asia Precision Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 422.00 in Asia Precision Public on August 31, 2024 and sell it today you would lose (235.00) from holding Asia Precision Public or give up 55.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.33% |
| Values | Daily Returns |
Dow Jones Industrial vs. Asia Precision Public
Performance |
| Timeline |
Dow Jones and Asia Precision Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Asia Precision Public
Pair trading matchups for Asia Precision
Pair Trading with Dow Jones and Asia Precision
The main advantage of trading using opposite Dow Jones and Asia Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Asia Precision 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 Asia Precision will offset losses from the drop in Asia Precision's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| Asia Precision vs. Gulf Energy Development | Asia Precision vs. Energy Absolute Public | Asia Precision vs. WHA Public | Asia Precision vs. Bangkok Expressway and |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |