Correlation Between Dow Jones and KRAKATAU STEEL
Can any of the company-specific risk be diversified away by investing in both Dow Jones and KRAKATAU STEEL 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 Dow Jones and KRAKATAU STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and KRAKATAU STEEL B , you can compare the effects of market volatilities on Dow Jones and KRAKATAU STEEL 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 Dow Jones with a short position of KRAKATAU STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and KRAKATAU STEEL.
Diversification Opportunities for Dow Jones and KRAKATAU STEEL
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and KRAKATAU is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and KRAKATAU STEEL B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KRAKATAU STEEL B and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with KRAKATAU STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KRAKATAU STEEL B has no effect on the direction of Dow Jones i.e., Dow Jones and KRAKATAU STEEL go up and down completely randomly.
Pair Corralation between Dow Jones and KRAKATAU STEEL
If you would invest 0.60 in KRAKATAU STEEL B on September 12, 2024 and sell it today you would earn a total of 0.00 from holding KRAKATAU STEEL B or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. KRAKATAU STEEL B
Performance |
| Timeline |
Dow Jones and KRAKATAU STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
KRAKATAU STEEL B
Pair trading matchups for KRAKATAU STEEL
Pair Trading with Dow Jones and KRAKATAU STEEL
The main advantage of trading using opposite Dow Jones and KRAKATAU STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, KRAKATAU STEEL 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 KRAKATAU STEEL will offset losses from the drop in KRAKATAU STEEL's long position.| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
| KRAKATAU STEEL vs. Apple Inc | KRAKATAU STEEL vs. Apple Inc | KRAKATAU STEEL vs. Apple Inc | KRAKATAU STEEL vs. Apple Inc |
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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