Correlation Between Guangshen Railway and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Guangshen Railway 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 Guangshen Railway and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangshen Railway and Dow Jones Industrial, you can compare the effects of market volatilities on Guangshen Railway 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 Guangshen Railway with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangshen Railway and Dow Jones.
Diversification Opportunities for Guangshen Railway and Dow Jones
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Guangshen and Dow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Guangshen Railway 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 Guangshen Railway 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 Guangshen Railway 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 Guangshen Railway i.e., Guangshen Railway and Dow Jones go up and down completely randomly.
Pair Corralation between Guangshen Railway and Dow Jones
If you would invest 4,179,460 in Dow Jones Industrial on September 5, 2024 and sell it today you would earn a total of 291,093 from holding Dow Jones Industrial or generate 6.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangshen Railway vs. Dow Jones Industrial
Performance |
| Timeline |
Guangshen Railway and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Guangshen Railway
Pair trading matchups for Guangshen Railway
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Guangshen Railway and Dow Jones
The main advantage of trading using opposite Guangshen Railway and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangshen Railway 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.| Guangshen Railway vs. Trinity Industries | Guangshen Railway vs. CSX Corporation | Guangshen Railway vs. Norfolk Southern | Guangshen Railway vs. Greenbrier Companies |
| Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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