Correlation Between China Health and Dow Jones
Can any of the company-specific risk be diversified away by investing in both China Health 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 Health 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 Health Management and Dow Jones Industrial, you can compare the effects of market volatilities on China Health 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 Health with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Health and Dow Jones.
Diversification Opportunities for China Health and Dow Jones
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Dow is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding China Health Management 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 Health 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 Health Management 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 Health i.e., China Health and Dow Jones go up and down completely randomly.
Pair Corralation between China Health and Dow Jones
Given the investment horizon of 90 days China Health Management is expected to generate 12.1 times more return on investment than Dow Jones. However, China Health is 12.1 times more volatile than Dow Jones Industrial. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 0.70 in China Health Management on August 27, 2024 and sell it today you would lose (0.09) from holding China Health Management or give up 12.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Health Management vs. Dow Jones Industrial
Performance |
| Timeline |
China Health and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
China Health Management
Pair trading matchups for China Health
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with China Health and Dow Jones
The main advantage of trading using opposite China Health and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Health 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 Health vs. Boxlight Corp Class | China Health vs. Siyata Mobile | China Health vs. ClearOne | China Health vs. HUMANA INC |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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