Correlation Between China Asset and Dow Jones
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By analyzing existing cross correlation between China Asset Management and Dow Jones Industrial, you can compare the effects of market volatilities on China Asset and Dow Jones 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 China Asset with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Asset and Dow Jones.
Diversification Opportunities for China Asset and Dow Jones
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Dow is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding China Asset Management and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and China Asset 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 China Asset Management are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of China Asset i.e., China Asset and Dow Jones go up and down completely randomly.
Pair Corralation between China Asset and Dow Jones
Assuming the 90 days trading horizon China Asset is expected to generate 2.08 times less return on investment than Dow Jones. But when comparing it to its historical volatility, China Asset Management is 1.07 times less risky than Dow Jones. It trades about 0.17 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 4,222,188 in Dow Jones Industrial on September 6, 2024 and sell it today you would earn a total of 279,216 from holding Dow Jones Industrial or generate 6.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.65% |
Values | Daily Returns |
China Asset Management vs. Dow Jones Industrial
Performance |
Timeline |
China Asset and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
China Asset Management
Pair trading matchups for China Asset
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with China Asset and Dow Jones
The main advantage of trading using opposite China Asset and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Asset position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.China Asset vs. Sunwave Communications Co | China Asset vs. TianJin 712 Communication | China Asset vs. Dr Peng Telecom | China Asset vs. Shenwu Energy Saving |
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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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