Correlation Between Dow Jones and Danang Rubber
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Danang Rubber 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 Danang Rubber 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 Danang Rubber JSC, you can compare the effects of market volatilities on Dow Jones and Danang Rubber 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 Danang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Danang Rubber.
Diversification Opportunities for Dow Jones and Danang Rubber
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Danang is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Danang Rubber JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danang Rubber JSC 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 Danang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danang Rubber JSC has no effect on the direction of Dow Jones i.e., Dow Jones and Danang Rubber go up and down completely randomly.
Pair Corralation between Dow Jones and Danang Rubber
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Danang Rubber. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 1.56 times less risky than Danang Rubber. The index trades about -0.16 of its potential returns per unit of risk. The Danang Rubber JSC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,770,000 in Danang Rubber JSC on December 1, 2024 and sell it today you would earn a total of 50,000 from holding Danang Rubber JSC or generate 1.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. Danang Rubber JSC
Performance |
| Timeline |
Dow Jones and Danang Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Danang Rubber JSC
Pair trading matchups for Danang Rubber
Pair Trading with Dow Jones and Danang Rubber
The main advantage of trading using opposite Dow Jones and Danang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Danang Rubber 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 Danang Rubber will offset losses from the drop in Danang Rubber's long position.| Dow Jones vs. Cannae Holdings | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. SEI Investments | Dow Jones vs. Cracker Barrel Old |
| Danang Rubber vs. VTC Telecommunications JSC | Danang Rubber vs. Hanoi Plastics JSC | Danang Rubber vs. Ben Thanh Rubber | Danang Rubber vs. Saigon Telecommunication Technologies |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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