Correlation Between Dow Jones and Bayu Buana
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Bayu Buana 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 Bayu Buana 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 Bayu Buana Tbk, you can compare the effects of market volatilities on Dow Jones and Bayu Buana 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 Bayu Buana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Bayu Buana.
Diversification Opportunities for Dow Jones and Bayu Buana
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Bayu is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Bayu Buana Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayu Buana Tbk 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 Bayu Buana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayu Buana Tbk has no effect on the direction of Dow Jones i.e., Dow Jones and Bayu Buana go up and down completely randomly.
Pair Corralation between Dow Jones and Bayu Buana
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.41 times more return on investment than Bayu Buana. However, Dow Jones Industrial is 2.42 times less risky than Bayu Buana. It trades about 0.11 of its potential returns per unit of risk. Bayu Buana Tbk is currently generating about 0.02 per unit of risk. If you would invest 3,858,519 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 632,546 from holding Dow Jones Industrial or generate 16.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.62% |
| Values | Daily Returns |
Dow Jones Industrial vs. Bayu Buana Tbk
Performance |
| Timeline |
Dow Jones and Bayu Buana Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Bayu Buana Tbk
Pair trading matchups for Bayu Buana
Pair Trading with Dow Jones and Bayu Buana
The main advantage of trading using opposite Dow Jones and Bayu Buana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Bayu Buana 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 Bayu Buana will offset losses from the drop in Bayu Buana's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Bayu Buana vs. Japfa Comfeed Indonesia | Bayu Buana vs. Charoen Pokphand Indonesia | Bayu Buana vs. Erajaya Swasembada Tbk | Bayu Buana vs. Indofood Cbp Sukses |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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