Correlation Between CHO Pharma and Dow Jones
Can any of the company-specific risk be diversified away by investing in both CHO Pharma 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 CHO Pharma and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHO Pharma and Dow Jones Industrial, you can compare the effects of market volatilities on CHO Pharma 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 CHO Pharma with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHO Pharma and Dow Jones.
Diversification Opportunities for CHO Pharma and Dow Jones
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between CHO and Dow is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding CHO Pharma 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 CHO Pharma 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 CHO Pharma 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 CHO Pharma i.e., CHO Pharma and Dow Jones go up and down completely randomly.
Pair Corralation between CHO Pharma and Dow Jones
Assuming the 90 days trading horizon CHO Pharma is expected to generate 6.8 times more return on investment than Dow Jones. However, CHO Pharma is 6.8 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 -0.16 per unit of risk. If you would invest 5,160 in CHO Pharma on December 1, 2024 and sell it today you would earn a total of 1,010 from holding CHO Pharma or generate 19.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
CHO Pharma vs. Dow Jones Industrial
Performance |
| Timeline |
CHO Pharma and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
CHO Pharma
Pair trading matchups for CHO Pharma
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with CHO Pharma and Dow Jones
The main advantage of trading using opposite CHO Pharma and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHO Pharma 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.| CHO Pharma vs. Taiwan Semiconductor Manufacturing | CHO Pharma vs. Hon Hai Precision | CHO Pharma vs. MediaTek | CHO Pharma vs. Chunghwa Telecom Co |
| Dow Jones vs. Cannae Holdings | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. SEI Investments | Dow Jones vs. Cracker Barrel Old |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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