Correlation Between Chin Poon and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Chin Poon 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 Chin Poon and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chin Poon Industrial Co and Dow Jones Industrial, you can compare the effects of market volatilities on Chin Poon 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 Chin Poon with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chin Poon and Dow Jones.
Diversification Opportunities for Chin Poon and Dow Jones
Excellent diversification
The 3 months correlation between Chin and Dow is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Chin Poon Industrial Co 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 Chin Poon 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 Chin Poon Industrial Co 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 Chin Poon i.e., Chin Poon and Dow Jones go up and down completely randomly.
Pair Corralation between Chin Poon and Dow Jones
Assuming the 90 days trading horizon Chin Poon Industrial Co is expected to under-perform the Dow Jones. In addition to that, Chin Poon is 2.75 times more volatile than Dow Jones Industrial. It trades about -0.06 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of volatility. If you would invest 3,640,493 in Dow Jones Industrial on September 4, 2024 and sell it today you would earn a total of 830,060 from holding Dow Jones Industrial or generate 22.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.98% |
| Values | Daily Returns |
Chin Poon Industrial Co vs. Dow Jones Industrial
Performance |
| Timeline |
Chin Poon and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Chin Poon Industrial Co
Pair trading matchups for Chin Poon
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Chin Poon and Dow Jones
The main advantage of trading using opposite Chin Poon and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chin Poon 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.| Chin Poon vs. Taiwan Semiconductor Manufacturing | Chin Poon vs. Yang Ming Marine | Chin Poon vs. AU Optronics | Chin Poon vs. Innolux Corp |
| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |