Correlation Between Dow Jones and Cho Bi
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Cho Bi 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 Dow Jones and Cho Bi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Cho Bi Co, you can compare the effects of market volatilities on Dow Jones and Cho Bi 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 Dow Jones with a short position of Cho Bi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Cho Bi.
Diversification Opportunities for Dow Jones and Cho Bi
Very good diversification
The 3 months correlation between Dow and Cho is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Cho Bi Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cho Bi and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Cho Bi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cho Bi has no effect on the direction of Dow Jones i.e., Dow Jones and Cho Bi go up and down completely randomly.
Pair Corralation between Dow Jones and Cho Bi
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.44 times more return on investment than Cho Bi. However, Dow Jones Industrial is 2.26 times less risky than Cho Bi. It trades about 0.08 of its potential returns per unit of risk. Cho Bi Co is currently generating about -0.04 per unit of risk. If you would invest 3,867,736 in Dow Jones Industrial on November 3, 2024 and sell it today you would earn a total of 586,730 from holding Dow Jones Industrial or generate 15.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.56% |
| Values | Daily Returns |
Dow Jones Industrial vs. Cho Bi Co
Performance |
| Timeline |
Dow Jones and Cho Bi Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Cho Bi Co
Pair trading matchups for Cho Bi
Pair Trading with Dow Jones and Cho Bi
The main advantage of trading using opposite Dow Jones and Cho Bi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Cho Bi 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 Cho Bi will offset losses from the drop in Cho Bi's long position.| Dow Jones vs. Rambler Metals and | Dow Jones vs. Nicola Mining | Dow Jones vs. Old Dominion Freight | Dow Jones vs. United Guardian |
| Cho Bi vs. DB Financial Investment | Cho Bi vs. Mobile Appliance | Cho Bi vs. Incar Financial Service | Cho Bi vs. Lotte Data Communication |
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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