Correlation Between Chunbo and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Chunbo 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 Chunbo and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chunbo Co and Dow Jones Industrial, you can compare the effects of market volatilities on Chunbo 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 Chunbo with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunbo and Dow Jones.
Diversification Opportunities for Chunbo and Dow Jones
Pay attention - limited upside
The 3 months correlation between Chunbo and Dow is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chunbo 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 Chunbo 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 Chunbo 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 Chunbo i.e., Chunbo and Dow Jones go up and down completely randomly.
Pair Corralation between Chunbo and Dow Jones
Assuming the 90 days trading horizon Chunbo Co is expected to under-perform the Dow Jones. In addition to that, Chunbo is 4.86 times more volatile than Dow Jones Industrial. It trades about -0.12 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 3,383,361 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,107,704 from holding Dow Jones Industrial or generate 32.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.06% |
| Values | Daily Returns |
Chunbo Co vs. Dow Jones Industrial
Performance |
| Timeline |
Chunbo and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Chunbo Co
Pair trading matchups for Chunbo
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Chunbo and Dow Jones
The main advantage of trading using opposite Chunbo and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunbo 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.| Chunbo vs. LG Chem | Chunbo vs. Hyosung Chemical Corp | Chunbo vs. LIG ES SPAC | Chunbo vs. Youngchang Chemical Co |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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