Correlation Between Dow Jones and Samhi Hotels
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Samhi Hotels 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 Samhi Hotels 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 Samhi Hotels Limited, you can compare the effects of market volatilities on Dow Jones and Samhi Hotels 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 Samhi Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Samhi Hotels.
Diversification Opportunities for Dow Jones and Samhi Hotels
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Samhi is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Samhi Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhi Hotels Limited 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 Samhi Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhi Hotels Limited has no effect on the direction of Dow Jones i.e., Dow Jones and Samhi Hotels go up and down completely randomly.
Pair Corralation between Dow Jones and Samhi Hotels
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.48 times more return on investment than Samhi Hotels. However, Dow Jones Industrial is 2.07 times less risky than Samhi Hotels. It trades about 0.27 of its potential returns per unit of risk. Samhi Hotels Limited is currently generating about 0.04 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Samhi Hotels Limited
Performance |
| Timeline |
Dow Jones and Samhi Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Samhi Hotels Limited
Pair trading matchups for Samhi Hotels
Pair Trading with Dow Jones and Samhi Hotels
The main advantage of trading using opposite Dow Jones and Samhi Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Samhi Hotels 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 Samhi Hotels will offset losses from the drop in Samhi Hotels' long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| Samhi Hotels vs. MMTC Limited | Samhi Hotels vs. Kingfa Science Technology | Samhi Hotels vs. Rico Auto Industries | Samhi Hotels vs. GACM Technologies Limited |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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