Correlation Between China Citic and Dow Jones
Can any of the company-specific risk be diversified away by investing in both China Citic 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 China Citic and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Citic Bank and Dow Jones Industrial, you can compare the effects of market volatilities on China Citic 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 China Citic with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Citic and Dow Jones.
Diversification Opportunities for China Citic and Dow Jones
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Dow is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding China Citic Bank 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 China Citic 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 China Citic Bank 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 China Citic i.e., China Citic and Dow Jones go up and down completely randomly.
Pair Corralation between China Citic and Dow Jones
Assuming the 90 days horizon China Citic Bank is expected to generate 5.43 times more return on investment than Dow Jones. However, China Citic is 5.43 times more volatile than Dow Jones Industrial. It trades about 0.23 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.2 per unit of risk. If you would invest 1,198 in China Citic Bank on November 18, 2024 and sell it today you would earn a total of 192.00 from holding China Citic Bank or generate 16.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
China Citic Bank vs. Dow Jones Industrial
Performance |
| Timeline |
China Citic and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
China Citic Bank
Pair trading matchups for China Citic
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with China Citic and Dow Jones
The main advantage of trading using opposite China Citic and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Citic 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.| China Citic vs. China Everbright Bank | China Citic vs. China Merchants Bank | China Citic vs. Postal Savings Bank | China Citic vs. China Merchants Bank |
| Dow Jones vs. Palomar Holdings | Dow Jones vs. Mesa Air Group | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Unum Group |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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