Correlation Between CRRC and Dow Jones
Can any of the company-specific risk be diversified away by investing in both CRRC and Dow Jones 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 CRRC and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CRRC Limited and Dow Jones Industrial, you can compare the effects of market volatilities on CRRC 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 CRRC with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRRC and Dow Jones.
Diversification Opportunities for CRRC and Dow Jones
Poor diversification
The 3 months correlation between CRRC and Dow is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding CRRC Limited 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 CRRC 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 CRRC Limited 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 CRRC i.e., CRRC and Dow Jones go up and down completely randomly.
Pair Corralation between CRRC and Dow Jones
Assuming the 90 days horizon CRRC Limited is expected to generate 6.19 times more return on investment than Dow Jones. However, CRRC is 6.19 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of risk. If you would invest 14.00 in CRRC Limited on September 5, 2024 and sell it today you would earn a total of 47.00 from holding CRRC Limited or generate 335.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.21% |
Values | Daily Returns |
CRRC Limited vs. Dow Jones Industrial
Performance |
Timeline |
CRRC and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
CRRC Limited
Pair trading matchups for CRRC
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with CRRC and Dow Jones
The main advantage of trading using opposite CRRC and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRRC 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.CRRC vs. Superior Plus Corp | CRRC vs. NMI Holdings | CRRC vs. Origin Agritech | CRRC vs. SIVERS SEMICONDUCTORS AB |
Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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