Correlation Between Dow Jones and Atour Lifestyle
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Atour Lifestyle 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 Atour Lifestyle 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 Atour Lifestyle Holdings, you can compare the effects of market volatilities on Dow Jones and Atour Lifestyle 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 Atour Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Atour Lifestyle.
Diversification Opportunities for Dow Jones and Atour Lifestyle
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Atour is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Atour Lifestyle Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atour Lifestyle Holdings 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 Atour Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atour Lifestyle Holdings has no effect on the direction of Dow Jones i.e., Dow Jones and Atour Lifestyle go up and down completely randomly.
Pair Corralation between Dow Jones and Atour Lifestyle
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.52 times less return on investment than Atour Lifestyle. But when comparing it to its historical volatility, Dow Jones Industrial is 3.8 times less risky than Atour Lifestyle. It trades about 0.19 of its potential returns per unit of risk. Atour Lifestyle Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,853 in Atour Lifestyle Holdings on August 31, 2024 and sell it today you would earn a total of 630.00 from holding Atour Lifestyle Holdings or generate 34.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Atour Lifestyle Holdings
Performance |
| Timeline |
Dow Jones and Atour Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Atour Lifestyle Holdings
Pair trading matchups for Atour Lifestyle
Pair Trading with Dow Jones and Atour Lifestyle
The main advantage of trading using opposite Dow Jones and Atour Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Atour Lifestyle 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 Atour Lifestyle will offset losses from the drop in Atour Lifestyle'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 |
| Atour Lifestyle vs. InterContinental Hotels Group | Atour Lifestyle vs. GreenTree Hospitality Group | Atour Lifestyle vs. Hyatt Hotels | Atour Lifestyle vs. Choice Hotels International |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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