Correlation Between New Asia and Dow Jones
Can any of the company-specific risk be diversified away by investing in both New 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 New 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 New Asia Construction and Dow Jones Industrial, you can compare the effects of market volatilities on New 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 New Asia with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Asia and Dow Jones.
Diversification Opportunities for New Asia and Dow Jones
Good diversification
The 3 months correlation between New and Dow is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding New Asia Construction 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 New 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 New Asia Construction 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 New Asia i.e., New Asia and Dow Jones go up and down completely randomly.
Pair Corralation between New Asia and Dow Jones
Assuming the 90 days trading horizon New Asia Construction is expected to generate 5.58 times more return on investment than Dow Jones. However, New Asia is 5.58 times more volatile than Dow Jones Industrial. It trades about 0.22 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.03 per unit of risk. If you would invest 1,280 in New Asia Construction on December 27, 2024 and sell it today you would earn a total of 860.00 from holding New Asia Construction or generate 67.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 91.8% |
Values | Daily Returns |
New Asia Construction vs. Dow Jones Industrial
Performance |
Timeline |
New Asia and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
New Asia Construction
Pair trading matchups for New Asia
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with New Asia and Dow Jones
The main advantage of trading using opposite New Asia and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New 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.New Asia vs. BES Engineering Co | New Asia vs. Delpha Construction Co | New Asia vs. Cathay Real Estate | New Asia vs. Da Cin Construction Co |
Dow Jones vs. Pintec Technology Holdings | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Chiba Bank Ltd | Dow Jones vs. Alvotech |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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