Correlation Between Dow Jones and Roshan Packages
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Roshan Packages 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 Roshan Packages 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 Roshan Packages, you can compare the effects of market volatilities on Dow Jones and Roshan Packages 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 Roshan Packages. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Roshan Packages.
Diversification Opportunities for Dow Jones and Roshan Packages
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and Roshan is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Roshan Packages in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roshan Packages 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 Roshan Packages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roshan Packages has no effect on the direction of Dow Jones i.e., Dow Jones and Roshan Packages go up and down completely randomly.
Pair Corralation between Dow Jones and Roshan Packages
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.17 times less return on investment than Roshan Packages. But when comparing it to its historical volatility, Dow Jones Industrial is 4.36 times less risky than Roshan Packages. It trades about 0.12 of its potential returns per unit of risk. Roshan Packages is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 828.00 in Roshan Packages on August 31, 2024 and sell it today you would earn a total of 911.00 from holding Roshan Packages or generate 110.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.06% |
| Values | Daily Returns |
Dow Jones Industrial vs. Roshan Packages
Performance |
| Timeline |
Dow Jones and Roshan Packages Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Roshan Packages
Pair trading matchups for Roshan Packages
Pair Trading with Dow Jones and Roshan Packages
The main advantage of trading using opposite Dow Jones and Roshan Packages positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Roshan Packages 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 Roshan Packages will offset losses from the drop in Roshan Packages' 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 |
| Roshan Packages vs. Masood Textile Mills | Roshan Packages vs. Fauji Foods | Roshan Packages vs. KSB Pumps | Roshan Packages vs. Mari Petroleum |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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