Correlation Between FKS Food and Dow Jones
Can any of the company-specific risk be diversified away by investing in both FKS Food 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 FKS Food and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FKS Food Sejahtera and Dow Jones Industrial, you can compare the effects of market volatilities on FKS Food 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 FKS Food with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of FKS Food and Dow Jones.
Diversification Opportunities for FKS Food and Dow Jones
Excellent diversification
The 3 months correlation between FKS and Dow is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding FKS Food Sejahtera 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 FKS Food 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 FKS Food Sejahtera 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 FKS Food i.e., FKS Food and Dow Jones go up and down completely randomly.
Pair Corralation between FKS Food and Dow Jones
Assuming the 90 days trading horizon FKS Food Sejahtera is expected to under-perform the Dow Jones. In addition to that, FKS Food is 1.08 times more volatile than Dow Jones Industrial. It trades about -0.48 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of volatility. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FKS Food Sejahtera vs. Dow Jones Industrial
Performance |
| Timeline |
FKS Food and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
FKS Food Sejahtera
Pair trading matchups for FKS Food
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with FKS Food and Dow Jones
The main advantage of trading using opposite FKS Food and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FKS Food 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.| FKS Food vs. Bank BRISyariah Tbk | FKS Food vs. Mitra Pinasthika Mustika | FKS Food vs. Jakarta Int Hotels | FKS Food vs. Indosterling Technomedia Tbk |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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