Correlation Between Dow Jones and Panca Budi
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Panca Budi 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 Panca Budi 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 Panca Budi Idaman, you can compare the effects of market volatilities on Dow Jones and Panca Budi 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 Panca Budi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Panca Budi.
Diversification Opportunities for Dow Jones and Panca Budi
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Panca is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Panca Budi Idaman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panca Budi Idaman 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 Panca Budi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panca Budi Idaman has no effect on the direction of Dow Jones i.e., Dow Jones and Panca Budi go up and down completely randomly.
Pair Corralation between Dow Jones and Panca Budi
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.25 times less return on investment than Panca Budi. But when comparing it to its historical volatility, Dow Jones Industrial is 2.68 times less risky than Panca Budi. It trades about 0.21 of its potential returns per unit of risk. Panca Budi Idaman is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 48,200 in Panca Budi Idaman on August 25, 2024 and sell it today you would earn a total of 4,800 from holding Panca Budi Idaman or generate 9.96% 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. Panca Budi Idaman
Performance |
| Timeline |
Dow Jones and Panca Budi Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Panca Budi Idaman
Pair trading matchups for Panca Budi
Pair Trading with Dow Jones and Panca Budi
The main advantage of trading using opposite Dow Jones and Panca Budi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Panca Budi 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 Panca Budi will offset losses from the drop in Panca Budi's long position.| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
| Panca Budi vs. Mitrabara Adiperdana PT | Panca Budi vs. Mark Dynamics Indonesia | Panca Budi vs. Prodia Widyahusada Tbk | Panca Budi vs. Selamat Sempurna Tbk |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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