Correlation Between Dow Jones and Hesai Group
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Hesai Group 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 Hesai Group 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 Hesai Group American, you can compare the effects of market volatilities on Dow Jones and Hesai Group 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 Hesai Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Hesai Group.
Diversification Opportunities for Dow Jones and Hesai Group
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Hesai is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Hesai Group American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hesai Group American 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 Hesai Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hesai Group American has no effect on the direction of Dow Jones i.e., Dow Jones and Hesai Group go up and down completely randomly.
Pair Corralation between Dow Jones and Hesai Group
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.45 times less return on investment than Hesai Group. But when comparing it to its historical volatility, Dow Jones Industrial is 5.13 times less risky than Hesai Group. It trades about 0.16 of its potential returns per unit of risk. Hesai Group American is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 428.00 in Hesai Group American on August 26, 2024 and sell it today you would earn a total of 46.00 from holding Hesai Group American or generate 10.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Hesai Group American
Performance |
| Timeline |
Dow Jones and Hesai Group Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Hesai Group American
Pair trading matchups for Hesai Group
Pair Trading with Dow Jones and Hesai Group
The main advantage of trading using opposite Dow Jones and Hesai Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Hesai Group 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 Hesai Group will offset losses from the drop in Hesai Group's long position.| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
| Hesai Group vs. Zhihu Inc ADR | Hesai Group vs. Integrated Drilling Equipment | Hesai Group vs. Cabo Drilling Corp | Hesai Group vs. Tenaris SA ADR |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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