Correlation Between Dow Jones and Samchai Steel
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Samchai Steel 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 Samchai Steel 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 Samchai Steel Industries, you can compare the effects of market volatilities on Dow Jones and Samchai Steel 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 Samchai Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Samchai Steel.
Diversification Opportunities for Dow Jones and Samchai Steel
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and Samchai is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Samchai Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samchai Steel Industries 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 Samchai Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samchai Steel Industries has no effect on the direction of Dow Jones i.e., Dow Jones and Samchai Steel go up and down completely randomly.
Pair Corralation between Dow Jones and Samchai Steel
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.1 times more return on investment than Samchai Steel. However, Dow Jones Industrial is 10.23 times less risky than Samchai Steel. It trades about -0.29 of its potential returns per unit of risk. Samchai Steel Industries is currently generating about -0.1 per unit of risk. If you would invest 4,414,856 in Dow Jones Industrial on October 12, 2024 and sell it today you would lose (221,011) from holding Dow Jones Industrial or give up 5.01% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Dow Jones Industrial vs. Samchai Steel Industries
Performance |
Timeline |
Dow Jones and Samchai Steel Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Samchai Steel Industries
Pair trading matchups for Samchai Steel
Pair Trading with Dow Jones and Samchai Steel
The main advantage of trading using opposite Dow Jones and Samchai Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Samchai Steel 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 Samchai Steel will offset losses from the drop in Samchai Steel's long position.Dow Jones vs. Lululemon Athletica | Dow Jones vs. Vistra Energy Corp | Dow Jones vs. The Gap, | Dow Jones vs. Pool Corporation |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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