Correlation Between Dow Jones and Nusantara Almazia
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Nusantara Almazia 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 Nusantara Almazia 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 Nusantara Almazia, you can compare the effects of market volatilities on Dow Jones and Nusantara Almazia 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 Nusantara Almazia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Nusantara Almazia.
Diversification Opportunities for Dow Jones and Nusantara Almazia
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Nusantara is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Nusantara Almazia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nusantara Almazia 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 Nusantara Almazia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nusantara Almazia has no effect on the direction of Dow Jones i.e., Dow Jones and Nusantara Almazia go up and down completely randomly.
Pair Corralation between Dow Jones and Nusantara Almazia
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.13 times more return on investment than Nusantara Almazia. However, Dow Jones Industrial is 7.57 times less risky than Nusantara Almazia. It trades about 0.12 of its potential returns per unit of risk. Nusantara Almazia is currently generating about -0.04 per unit of risk. If you would invest 3,383,361 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,107,704 from holding Dow Jones Industrial or generate 32.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Nusantara Almazia
Performance |
| Timeline |
Dow Jones and Nusantara Almazia Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Nusantara Almazia
Pair trading matchups for Nusantara Almazia
Pair Trading with Dow Jones and Nusantara Almazia
The main advantage of trading using opposite Dow Jones and Nusantara Almazia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Nusantara Almazia 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 Nusantara Almazia will offset losses from the drop in Nusantara Almazia's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| Nusantara Almazia vs. Bima Sakti Pertiwi | Nusantara Almazia vs. DMS Propertindo Tbk | Nusantara Almazia vs. Repower Asia Indonesia | Nusantara Almazia vs. Pollux Properti 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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