Correlation Between Chongqing Machinery and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery 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 Chongqing Machinery and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chongqing Machinery Electric and Dow Jones Industrial, you can compare the effects of market volatilities on Chongqing Machinery 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 Chongqing Machinery with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and Dow Jones.
Diversification Opportunities for Chongqing Machinery and Dow Jones
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and Dow is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric 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 Chongqing Machinery 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 Chongqing Machinery Electric 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 Chongqing Machinery i.e., Chongqing Machinery and Dow Jones go up and down completely randomly.
Pair Corralation between Chongqing Machinery and Dow Jones
Assuming the 90 days horizon Chongqing Machinery is expected to generate 3.05 times less return on investment than Dow Jones. In addition to that, Chongqing Machinery is 2.25 times more volatile than Dow Jones Industrial. It trades about 0.05 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of volatility. 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 Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. Dow Jones Industrial
Performance |
| Timeline |
Chongqing Machinery and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Chongqing Machinery Electric
Pair trading matchups for Chongqing Machinery
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Chongqing Machinery and Dow Jones
The main advantage of trading using opposite Chongqing Machinery and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery 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.| Chongqing Machinery vs. ABB | Chongqing Machinery vs. Emerson Electric Co | Chongqing Machinery vs. Superior Plus Corp | Chongqing Machinery vs. NMI Holdings |
| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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