Correlation Between Dow Jones and China Construction
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By analyzing existing cross correlation between Dow Jones Industrial and China Construction Bank, you can compare the effects of market volatilities on Dow Jones and China 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 China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and China Construction.
Diversification Opportunities for Dow Jones and China Construction
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and China is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and China Construction Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Construction Bank 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 Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Construction Bank has no effect on the direction of Dow Jones i.e., Dow Jones and China Construction go up and down completely randomly.
Pair Corralation between Dow Jones and China Construction
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.91 times less return on investment than China Construction. But when comparing it to its historical volatility, Dow Jones Industrial is 1.79 times less risky than China Construction. It trades about 0.08 of its potential returns per unit of risk. China Construction Bank is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 529.00 in China Construction Bank on October 20, 2024 and sell it today you would earn a total of 305.00 from holding China Construction Bank or generate 57.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.18% |
| Values | Daily Returns |
Dow Jones Industrial vs. China Construction Bank
Performance |
| Timeline |
Dow Jones and China Construction Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
China Construction Bank
Pair trading matchups for China Construction
Pair Trading with Dow Jones and China Construction
The main advantage of trading using opposite Dow Jones and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, China 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 China Construction will offset losses from the drop in China Construction's long position.| Dow Jones vs. Aluminum of | Dow Jones vs. Adtalem Global Education | Dow Jones vs. East Africa Metals | Dow Jones vs. Western Copper and |
| China Construction vs. Hengli Petrochemical Co | China Construction vs. Maoming Petro Chemical Shihua | China Construction vs. Jinsanjiang Silicon Material | China Construction vs. Wuhan Yangtze 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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