Correlation Between China Index and Duck Creek

Can any of the company-specific risk be diversified away by investing in both China Index and Duck Creek 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 China Index and Duck Creek into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Index Holdings and Duck Creek Technologies, you can compare the effects of market volatilities on China Index and Duck Creek 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 Index with a short position of Duck Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Index and Duck Creek.

Diversification Opportunities for China Index and Duck Creek

0.04

Correlation Coefficient

China Index  Duck Creek

Significant diversification

The 3 months correlation between China and Duck is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding China Index Holdings and Duck Creek Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duck Creek Technologies and China Index 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 Index Holdings are associated (or correlated) with Duck Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duck Creek Technologies has no effect on the direction of China Index i.e., China Index and Duck Creek go up and down completely randomly.

Pair Corralation between China Index and Duck Creek

If you would invest  1,899  in Duck Creek Technologies on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Duck Creek Technologies or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

China Index Holdings  vs.  Duck Creek Technologies

China Index Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Index Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, China Index is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Duck Creek Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duck Creek Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Duck Creek is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with China Index and Duck Creek

The main advantage of trading using opposite China Index and Duck Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Index position performs unexpectedly, Duck Creek 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 Duck Creek will offset losses from the drop in Duck Creek's long position.

The idea behind China Index Holdings and Duck Creek Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.