Correlation Between Pan Asia and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Pan Asia 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 Pan Asia and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pan Asia Footwear and Dow Jones Industrial, you can compare the effects of market volatilities on Pan Asia 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 Pan Asia with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan Asia and Dow Jones.
Diversification Opportunities for Pan Asia and Dow Jones
Very good diversification
The 3 months correlation between Pan and Dow is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Pan Asia Footwear 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 Pan Asia 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 Pan Asia Footwear 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 Pan Asia i.e., Pan Asia and Dow Jones go up and down completely randomly.
Pair Corralation between Pan Asia and Dow Jones
Assuming the 90 days trading horizon Pan Asia Footwear is expected to under-perform the Dow Jones. In addition to that, Pan Asia is 2.08 times more volatile than Dow Jones Industrial. It trades about -0.18 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.34 per unit of volatility. 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 | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pan Asia Footwear vs. Dow Jones Industrial
Performance |
| Timeline |
Pan Asia and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Pan Asia Footwear
Pair trading matchups for Pan Asia
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Pan Asia and Dow Jones
The main advantage of trading using opposite Pan Asia and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan Asia 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.| Pan Asia vs. Peoples Garment Public | Pan Asia vs. Nawarat Patanakarn Public | Pan Asia vs. KGI Securities Public | Pan Asia vs. Pato Chemical Industry |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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