Correlation Between Chung Lien and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Chung Lien 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 Chung Lien and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chung Lien Transportation and Dow Jones Industrial, you can compare the effects of market volatilities on Chung Lien 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 Chung Lien with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Lien and Dow Jones.
Diversification Opportunities for Chung Lien and Dow Jones
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chung and Dow is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Chung Lien Transportation 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 Chung Lien 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 Chung Lien Transportation 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 Chung Lien i.e., Chung Lien and Dow Jones go up and down completely randomly.
Pair Corralation between Chung Lien and Dow Jones
Assuming the 90 days trading horizon Chung Lien is expected to generate 292.33 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Chung Lien Transportation is 1.9 times less risky than Dow Jones. It trades about 0.0 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Chung Lien Transportation vs. Dow Jones Industrial
Performance |
| Timeline |
Chung Lien and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Chung Lien Transportation
Pair trading matchups for Chung Lien
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Chung Lien and Dow Jones
The main advantage of trading using opposite Chung Lien and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Lien 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.| Chung Lien vs. ADLINK Technology | Chung Lien vs. Chicony Power Technology | Chung Lien vs. Easywell Biomedicals | Chung Lien vs. Ching Feng Home |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |