Correlation Between Kung Long and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Kung Long 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 Kung Long and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kung Long Batteries and Dow Jones Industrial, you can compare the effects of market volatilities on Kung Long 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 Kung Long with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kung Long and Dow Jones.
Diversification Opportunities for Kung Long and Dow Jones
Very weak diversification
The 3 months correlation between Kung and Dow is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kung Long Batteries 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 Kung Long 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 Kung Long Batteries 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 Kung Long i.e., Kung Long and Dow Jones go up and down completely randomly.
Pair Corralation between Kung Long and Dow Jones
Assuming the 90 days trading horizon Kung Long Batteries is expected to generate 1.8 times more return on investment than Dow Jones. However, Kung Long is 1.8 times more volatile than Dow Jones Industrial. It trades about 0.21 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of risk. If you would invest 14,850 in Kung Long Batteries on August 30, 2024 and sell it today you would earn a total of 1,200 from holding Kung Long Batteries or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kung Long Batteries vs. Dow Jones Industrial
Performance |
| Timeline |
Kung Long and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Kung Long Batteries
Pair trading matchups for Kung Long
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Kung Long and Dow Jones
The main advantage of trading using opposite Kung Long and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kung Long 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.| Kung Long vs. Grape King Bio | Kung Long vs. TTET Union Corp | Kung Long vs. Zeng Hsing Industrial | Kung Long vs. Basso Industry Corp |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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