Correlation Between Dow Jones and Cheche Group
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Cheche Group 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 Cheche Group 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 Cheche Group Class, you can compare the effects of market volatilities on Dow Jones and Cheche Group 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 Cheche Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Cheche Group.
Diversification Opportunities for Dow Jones and Cheche Group
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Cheche is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Cheche Group Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheche Group Class 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 Cheche Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheche Group Class has no effect on the direction of Dow Jones i.e., Dow Jones and Cheche Group go up and down completely randomly.
Pair Corralation between Dow Jones and Cheche Group
Assuming the 90 days trading horizon Dow Jones is expected to generate 4.8 times less return on investment than Cheche Group. But when comparing it to its historical volatility, Dow Jones Industrial is 8.4 times less risky than Cheche Group. It trades about 0.16 of its potential returns per unit of risk. Cheche Group Class is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 73.00 in Cheche Group Class on August 26, 2024 and sell it today you would earn a total of 14.00 from holding Cheche Group Class or generate 19.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Cheche Group Class
Performance |
| Timeline |
Dow Jones and Cheche Group Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Cheche Group Class
Pair trading matchups for Cheche Group
Pair Trading with Dow Jones and Cheche Group
The main advantage of trading using opposite Dow Jones and Cheche Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Cheche Group 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 Cheche Group will offset losses from the drop in Cheche Group's long position.| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
| Cheche Group vs. Dennys Corp | Cheche Group vs. GEN Restaurant Group, | Cheche Group vs. X FAB Silicon Foundries | Cheche Group vs. Luxfer Holdings PLC |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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