Correlation Between Dow Jones and Truong Thanh
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Truong Thanh 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 Truong Thanh 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 Truong Thanh Furniture, you can compare the effects of market volatilities on Dow Jones and Truong Thanh 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 Truong Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Truong Thanh.
Diversification Opportunities for Dow Jones and Truong Thanh
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Truong is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Truong Thanh Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truong Thanh Furniture 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 Truong Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truong Thanh Furniture has no effect on the direction of Dow Jones i.e., Dow Jones and Truong Thanh go up and down completely randomly.
Pair Corralation between Dow Jones and Truong Thanh
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.79 times more return on investment than Truong Thanh. However, Dow Jones Industrial is 1.27 times less risky than Truong Thanh. It trades about 0.32 of its potential returns per unit of risk. Truong Thanh Furniture is currently generating about -0.3 per unit of risk. If you would invest 4,257,373 in Dow Jones Industrial on October 29, 2024 and sell it today you would earn a total of 185,052 from holding Dow Jones Industrial or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Truong Thanh Furniture
Performance |
| Timeline |
Dow Jones and Truong Thanh Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Truong Thanh Furniture
Pair trading matchups for Truong Thanh
Pair Trading with Dow Jones and Truong Thanh
The main advantage of trading using opposite Dow Jones and Truong Thanh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Truong Thanh 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 Truong Thanh will offset losses from the drop in Truong Thanh's long position.| Dow Jones vs. Lion One Metals | Dow Jones vs. PennantPark Floating Rate | Dow Jones vs. TFI International | Dow Jones vs. United Guardian |
| Truong Thanh vs. Nam Kim Steel | Truong Thanh vs. Fecon Mining JSC | Truong Thanh vs. Bao Ngoc Investment | Truong Thanh vs. Vu Dang 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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