Correlation Between Dow Jones and Megapower Makmur
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Megapower Makmur 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 Megapower Makmur 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 Megapower Makmur TBK, you can compare the effects of market volatilities on Dow Jones and Megapower Makmur 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 Megapower Makmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Megapower Makmur.
Diversification Opportunities for Dow Jones and Megapower Makmur
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Megapower is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Megapower Makmur TBK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megapower Makmur 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 Megapower Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megapower Makmur TBK has no effect on the direction of Dow Jones i.e., Dow Jones and Megapower Makmur go up and down completely randomly.
Pair Corralation between Dow Jones and Megapower Makmur
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.18 times more return on investment than Megapower Makmur. However, Dow Jones Industrial is 5.58 times less risky than Megapower Makmur. It trades about -0.01 of its potential returns per unit of risk. Megapower Makmur TBK is currently generating about -0.18 per unit of risk. If you would invest 4,429,313 in Dow Jones Industrial on September 12, 2024 and sell it today you would lose (4,530) from holding Dow Jones Industrial or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Megapower Makmur TBK
Performance |
| Timeline |
Dow Jones and Megapower Makmur Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Megapower Makmur TBK
Pair trading matchups for Megapower Makmur
Pair Trading with Dow Jones and Megapower Makmur
The main advantage of trading using opposite Dow Jones and Megapower Makmur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Megapower Makmur 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 Megapower Makmur will offset losses from the drop in Megapower Makmur's long position.| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
| Megapower Makmur vs. Terregra Asia Energy | Megapower Makmur vs. Bali Towerindo Sentra | Megapower Makmur vs. Sanurhasta Mitra PT | Megapower Makmur vs. Kencana Energi Lestari |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |