Correlation Between Dow Jones and Lien Viet
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Lien Viet 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 Dow Jones and Lien Viet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Lien Viet Post, you can compare the effects of market volatilities on Dow Jones and Lien Viet 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 Dow Jones with a short position of Lien Viet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Lien Viet.
Diversification Opportunities for Dow Jones and Lien Viet
Good diversification
The 3 months correlation between Dow and Lien is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Lien Viet Post in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lien Viet Post and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Lien Viet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lien Viet Post has no effect on the direction of Dow Jones i.e., Dow Jones and Lien Viet go up and down completely randomly.
Pair Corralation between Dow Jones and Lien Viet
Assuming the 90 days trading horizon Dow Jones is expected to generate 6.97 times less return on investment than Lien Viet. But when comparing it to its historical volatility, Dow Jones Industrial is 3.86 times less risky than Lien Viet. It trades about 0.05 of its potential returns per unit of risk. Lien Viet Post is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,726,884 in Lien Viet Post on October 23, 2024 and sell it today you would earn a total of 438,116 from holding Lien Viet Post or generate 16.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.31% |
Values | Daily Returns |
Dow Jones Industrial vs. Lien Viet Post
Performance |
Timeline |
Dow Jones and Lien Viet Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Lien Viet Post
Pair trading matchups for Lien Viet
Pair Trading with Dow Jones and Lien Viet
The main advantage of trading using opposite Dow Jones and Lien Viet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Lien Viet 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 Lien Viet will offset losses from the drop in Lien Viet's long position.Dow Jones vs. Grupo Televisa SAB | Dow Jones vs. NiSource | Dow Jones vs. Kinetik Holdings | Dow Jones vs. Empresa Distribuidora y |
Lien Viet vs. Fecon Mining JSC | Lien Viet vs. MST Investment JSC | Lien Viet vs. Vu Dang Investment | Lien Viet vs. PV2 Investment JSC |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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