Correlation Between Chien Kuo and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Chien Kuo 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 Chien Kuo and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chien Kuo Construction and Dow Jones Industrial, you can compare the effects of market volatilities on Chien Kuo 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 Chien Kuo with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chien Kuo and Dow Jones.
Diversification Opportunities for Chien Kuo and Dow Jones
Poor diversification
The 3 months correlation between Chien and Dow is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Chien Kuo Construction 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 Chien Kuo 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 Chien Kuo Construction 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 Chien Kuo i.e., Chien Kuo and Dow Jones go up and down completely randomly.
Pair Corralation between Chien Kuo and Dow Jones
Assuming the 90 days trading horizon Chien Kuo Construction is expected to generate 4.1 times more return on investment than Dow Jones. However, Chien Kuo is 4.1 times more volatile than Dow Jones Industrial. It trades about 0.15 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of risk. If you would invest 2,250 in Chien Kuo Construction on August 28, 2024 and sell it today you would earn a total of 455.00 from holding Chien Kuo Construction or generate 20.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Chien Kuo Construction vs. Dow Jones Industrial
Performance |
| Timeline |
Chien Kuo and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Chien Kuo Construction
Pair trading matchups for Chien Kuo
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Chien Kuo and Dow Jones
The main advantage of trading using opposite Chien Kuo and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chien Kuo 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.| Chien Kuo vs. Sunny Friend Environmental | Chien Kuo vs. TTET Union Corp | Chien Kuo vs. ECOVE Environment Corp | Chien Kuo vs. Yulon Finance Corp |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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