Correlation Between Dow Jones and Crown Asia
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Crown Asia 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 Crown Asia 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 Crown Asia Chemicals, you can compare the effects of market volatilities on Dow Jones and Crown Asia 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 Crown Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Crown Asia.
Diversification Opportunities for Dow Jones and Crown Asia
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Crown is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Crown Asia Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Asia Chemicals 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 Crown Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Asia Chemicals has no effect on the direction of Dow Jones i.e., Dow Jones and Crown Asia go up and down completely randomly.
Pair Corralation between Dow Jones and Crown Asia
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.4 times less return on investment than Crown Asia. But when comparing it to its historical volatility, Dow Jones Industrial is 2.74 times less risky than Crown Asia. It trades about 0.08 of its potential returns per unit of risk. Crown Asia Chemicals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 133.00 in Crown Asia Chemicals on August 29, 2024 and sell it today you would earn a total of 47.00 from holding Crown Asia Chemicals or generate 35.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.15% |
| Values | Daily Returns |
Dow Jones Industrial vs. Crown Asia Chemicals
Performance |
| Timeline |
Dow Jones and Crown Asia Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Crown Asia Chemicals
Pair trading matchups for Crown Asia
Pair Trading with Dow Jones and Crown Asia
The main advantage of trading using opposite Dow Jones and Crown Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Crown Asia 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 Crown Asia will offset losses from the drop in Crown Asia's long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| Crown Asia vs. Philippine Savings Bank | Crown Asia vs. Jollibee Foods Corp | Crown Asia vs. Prime Media Holdings | Crown Asia vs. Pacificonline Systems |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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