Correlation Between Dow Jones and China Railway
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By analyzing existing cross correlation between Dow Jones Industrial and China Railway Construction, you can compare the effects of market volatilities on Dow Jones and China Railway 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 China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and China Railway.
Diversification Opportunities for Dow Jones and China Railway
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and China is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and China Railway Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Constr 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 China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Constr has no effect on the direction of Dow Jones i.e., Dow Jones and China Railway go up and down completely randomly.
Pair Corralation between Dow Jones and China Railway
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.33 times less return on investment than China Railway. But when comparing it to its historical volatility, Dow Jones Industrial is 3.12 times less risky than China Railway. It trades about 0.13 of its potential returns per unit of risk. China Railway Construction is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 764.00 in China Railway Construction on August 24, 2024 and sell it today you would earn a total of 192.00 from holding China Railway Construction or generate 25.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.6% |
| Values | Daily Returns |
Dow Jones Industrial vs. China Railway Construction
Performance |
| Timeline |
Dow Jones and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
China Railway Construction
Pair trading matchups for China Railway
Pair Trading with Dow Jones and China Railway
The main advantage of trading using opposite Dow Jones and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, China Railway 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 China Railway will offset losses from the drop in China Railway's long position.| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
| China Railway vs. Jilin Jlu Communication | China Railway vs. Xiangyang Automobile Bearing | China Railway vs. Xinjiang Beixin RoadBridge | China Railway vs. Sinomach Automobile Co |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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