Correlation Between Dow Jones and Kedge Construction
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Kedge Construction 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 Kedge Construction 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 Kedge Construction Co, you can compare the effects of market volatilities on Dow Jones and Kedge Construction 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 Kedge Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Kedge Construction.
Diversification Opportunities for Dow Jones and Kedge Construction
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dow and Kedge is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Kedge Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kedge Construction 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 Kedge Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kedge Construction has no effect on the direction of Dow Jones i.e., Dow Jones and Kedge Construction go up and down completely randomly.
Pair Corralation between Dow Jones and Kedge Construction
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Kedge Construction. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 4.56 times less risky than Kedge Construction. The index trades about -0.22 of its potential returns per unit of risk. The Kedge Construction Co is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 7,030 in Kedge Construction Co on November 27, 2024 and sell it today you would earn a total of 1,500 from holding Kedge Construction Co or generate 21.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 80.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Kedge Construction Co
Performance |
| Timeline |
Dow Jones and Kedge Construction Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Kedge Construction Co
Pair trading matchups for Kedge Construction
Pair Trading with Dow Jones and Kedge Construction
The main advantage of trading using opposite Dow Jones and Kedge Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Kedge Construction 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 Kedge Construction will offset losses from the drop in Kedge Construction's long position.The idea behind Dow Jones Industrial and Kedge Construction Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kedge Construction vs. Chang Type Industrial | Kedge Construction vs. Anderson Industrial Corp | Kedge Construction vs. Klingon Aerospace | Kedge Construction vs. Basso Industry Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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