Correlation Between FIT Hon and Dow Jones
Can any of the company-specific risk be diversified away by investing in both FIT Hon and Dow Jones 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 FIT Hon and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIT Hon Teng and Dow Jones Industrial, you can compare the effects of market volatilities on FIT Hon and Dow Jones 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 FIT Hon with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIT Hon and Dow Jones.
Diversification Opportunities for FIT Hon and Dow Jones
Poor diversification
The 3 months correlation between FIT and Dow is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding FIT Hon Teng and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and FIT Hon 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 FIT Hon Teng are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of FIT Hon i.e., FIT Hon and Dow Jones go up and down completely randomly.
Pair Corralation between FIT Hon and Dow Jones
Assuming the 90 days horizon FIT Hon Teng is expected to generate 13.19 times more return on investment than Dow Jones. However, FIT Hon is 13.19 times more volatile than Dow Jones Industrial. It trades about 0.06 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 26.00 in FIT Hon Teng on August 24, 2024 and sell it today you would earn a total of 16.00 from holding FIT Hon Teng or generate 61.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIT Hon Teng vs. Dow Jones Industrial
Performance |
| Timeline |
FIT Hon and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
FIT Hon Teng
Pair trading matchups for FIT Hon
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with FIT Hon and Dow Jones
The main advantage of trading using opposite FIT Hon and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIT Hon position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| FIT Hon vs. KULR Technology Group | FIT Hon vs. Ouster Inc | FIT Hon vs. MicroCloud Hologram | FIT Hon vs. Kopin |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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