Correlation Between ZKH Group and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ZKH Group 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 ZKH Group and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZKH Group Limited and Dow Jones Industrial, you can compare the effects of market volatilities on ZKH Group 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 ZKH Group with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZKH Group and Dow Jones.
Diversification Opportunities for ZKH Group and Dow Jones
Poor diversification
The 3 months correlation between ZKH and Dow is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding ZKH Group 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 ZKH Group 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 ZKH Group 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 ZKH Group i.e., ZKH Group and Dow Jones go up and down completely randomly.
Pair Corralation between ZKH Group and Dow Jones
Considering the 90-day investment horizon ZKH Group Limited is expected to under-perform the Dow Jones. In addition to that, ZKH Group is 8.54 times more volatile than Dow Jones Industrial. It trades about -0.06 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 3,359,634 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 1,070,017 from holding Dow Jones Industrial or generate 31.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 47.98% |
| Values | Daily Returns |
ZKH Group Limited vs. Dow Jones Industrial
Performance |
| Timeline |
ZKH Group and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ZKH Group Limited
Pair trading matchups for ZKH Group
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ZKH Group and Dow Jones
The main advantage of trading using opposite ZKH Group and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZKH Group 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.| ZKH Group vs. Tyson Foods | ZKH Group vs. EMCOR Group | ZKH Group vs. Arm Holdings plc | ZKH Group vs. Taiwan Semiconductor Manufacturing |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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