Correlation Between Dow Jones and Nonthavej Hospital

Can any of the company-specific risk be diversified away by investing in both Dow Jones and Nonthavej Hospital 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 Nonthavej Hospital 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 Nonthavej Hospital Public, you can compare the effects of market volatilities on Dow Jones and Nonthavej Hospital 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 Nonthavej Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Nonthavej Hospital.

Diversification Opportunities for Dow Jones and Nonthavej Hospital

0.33

Correlation Coefficient

Dow Jones  Nonthavej Hospital

Weak diversification

The 3 months correlation between Dow and Nonthavej is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Nonthavej Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nonthavej Hospital Public 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 Nonthavej Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nonthavej Hospital Public has no effect on the direction of Dow Jones i.e., Dow Jones and Nonthavej Hospital go up and down completely randomly.

Pair Corralation between Dow Jones and Nonthavej Hospital

Assuming the 90 days trading horizon Dow Jones is expected to generate 35.05 times less return on investment than Nonthavej Hospital. But when comparing it to its historical volatility, Dow Jones Industrial is 64.69 times less risky than Nonthavej Hospital. It trades about 0.07 of its potential returns per unit of risk. Nonthavej Hospital Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,043  in Nonthavej Hospital Public on October 22, 2024 and sell it today you would lose (1,068) from holding Nonthavej Hospital Public or give up 26.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Dow Jones Industrial  vs.  Nonthavej Hospital Public

Pair Trading with Dow Jones and Nonthavej Hospital

The main advantage of trading using opposite Dow Jones and Nonthavej Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Nonthavej Hospital 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 Nonthavej Hospital will offset losses from the drop in Nonthavej Hospital's long position.

The idea behind Dow Jones Industrial and Nonthavej Hospital Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.