Correlation Between Dow Jones and Gujarat Ambuja

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Gujarat Ambuja 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 Gujarat Ambuja 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 Gujarat Ambuja Exports, you can compare the effects of market volatilities on Dow Jones and Gujarat Ambuja 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 Gujarat Ambuja. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Gujarat Ambuja.

Diversification Opportunities for Dow Jones and Gujarat Ambuja

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between Dow and Gujarat is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Gujarat Ambuja Exports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gujarat Ambuja Exports 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 Gujarat Ambuja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gujarat Ambuja Exports has no effect on the direction of Dow Jones i.e., Dow Jones and Gujarat Ambuja go up and down completely randomly.
    Optimize

Pair Corralation between Dow Jones and Gujarat Ambuja

Assuming the 90 days trading horizon Dow Jones is expected to generate 16.68 times less return on investment than Gujarat Ambuja. But when comparing it to its historical volatility, Dow Jones Industrial is 3.75 times less risky than Gujarat Ambuja. It trades about 0.05 of its potential returns per unit of risk. Gujarat Ambuja Exports is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  12,719  in Gujarat Ambuja Exports on September 13, 2024 and sell it today you would earn a total of  1,208  from holding Gujarat Ambuja Exports or generate 9.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Dow Jones Industrial  vs.  Gujarat Ambuja Exports

 Performance 
       Timeline  

Dow Jones and Gujarat Ambuja Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dow Jones and Gujarat Ambuja

The main advantage of trading using opposite Dow Jones and Gujarat Ambuja positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Gujarat Ambuja 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 Gujarat Ambuja will offset losses from the drop in Gujarat Ambuja's long position.
The idea behind Dow Jones Industrial and Gujarat Ambuja Exports pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

Other Complementary Tools

Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Global Correlations
Find global opportunities by holding instruments from different markets
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device