Correlation Between PT Bank and Dow Jones
Can any of the company-specific risk be diversified away by investing in both PT Bank 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 PT Bank and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Bank Bisnis and Dow Jones Industrial, you can compare the effects of market volatilities on PT Bank 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 PT Bank with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Dow Jones.
Diversification Opportunities for PT Bank and Dow Jones
Very good diversification
The 3 months correlation between BBSI and Dow is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Bisnis 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 PT Bank 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 PT Bank Bisnis 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 PT Bank i.e., PT Bank and Dow Jones go up and down completely randomly.
Pair Corralation between PT Bank and Dow Jones
Assuming the 90 days trading horizon PT Bank Bisnis is expected to generate 1.91 times more return on investment than Dow Jones. However, PT Bank is 1.91 times more volatile than Dow Jones Industrial. It trades about -0.06 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.22 per unit of risk. If you would invest 416,000 in PT Bank Bisnis on November 27, 2024 and sell it today you would lose (6,000) from holding PT Bank Bisnis or give up 1.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
PT Bank Bisnis vs. Dow Jones Industrial
Performance |
| Timeline |
PT Bank and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
PT Bank Bisnis
Pair trading matchups for PT Bank
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with PT Bank and Dow Jones
The main advantage of trading using opposite PT Bank and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank 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.| PT Bank vs. Bk Harda Internasional | PT Bank vs. Bank Yudha Bhakti | PT Bank vs. Bank Net Indonesia | PT Bank vs. Bank Amar Indonesia |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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