Correlation Between Raytech Holding and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Raytech Holding 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 Raytech Holding and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raytech Holding Limited and Dow Jones Industrial, you can compare the effects of market volatilities on Raytech Holding 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 Raytech Holding with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytech Holding and Dow Jones.
Diversification Opportunities for Raytech Holding and Dow Jones
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Raytech and Dow is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Raytech Holding Limited 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 Raytech Holding 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 Raytech Holding Limited 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 Raytech Holding i.e., Raytech Holding and Dow Jones go up and down completely randomly.
Pair Corralation between Raytech Holding and Dow Jones
Considering the 90-day investment horizon Raytech Holding Limited is expected to under-perform the Dow Jones. In addition to that, Raytech Holding is 10.48 times more volatile than Dow Jones Industrial. It trades about -0.07 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of volatility. If you would invest 3,359,792 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 1,113,865 from holding Dow Jones Industrial or generate 33.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 27.27% |
| Values | Daily Returns |
Raytech Holding Limited vs. Dow Jones Industrial
Performance |
| Timeline |
Raytech Holding and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Raytech Holding Limited
Pair trading matchups for Raytech Holding
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Raytech Holding and Dow Jones
The main advantage of trading using opposite Raytech Holding and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytech Holding 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.| Raytech Holding vs. The Cheesecake Factory | Raytech Holding vs. Oasis Hotel Resort | Raytech Holding vs. Dennys Corp | Raytech Holding vs. Simon Property Group |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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