Correlation Between Tanke Biosciences and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Tanke Biosciences 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 Tanke Biosciences and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tanke Biosciences and Dow Jones Industrial, you can compare the effects of market volatilities on Tanke Biosciences 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 Tanke Biosciences with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tanke Biosciences and Dow Jones.
Diversification Opportunities for Tanke Biosciences and Dow Jones
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tanke and Dow is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Tanke Biosciences 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 Tanke Biosciences 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 Tanke Biosciences 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 Tanke Biosciences i.e., Tanke Biosciences and Dow Jones go up and down completely randomly.
Pair Corralation between Tanke Biosciences and Dow Jones
Given the investment horizon of 90 days Tanke Biosciences is expected to generate 33.91 times more return on investment than Dow Jones. However, Tanke Biosciences is 33.91 times more volatile than Dow Jones Industrial. It trades about 0.04 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 16.00 in Tanke Biosciences on August 30, 2024 and sell it today you would lose (15.24) from holding Tanke Biosciences or give up 95.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tanke Biosciences vs. Dow Jones Industrial
Performance |
| Timeline |
Tanke Biosciences and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Tanke Biosciences
Pair trading matchups for Tanke Biosciences
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Tanke Biosciences and Dow Jones
The main advantage of trading using opposite Tanke Biosciences and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tanke Biosciences 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.| Tanke Biosciences vs. C2E Energy | Tanke Biosciences vs. Supurva Healthcare Group | Tanke Biosciences vs. Kasten Inc | Tanke Biosciences vs. CTR Investments Consulting |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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