Correlation Between Dow Jones and Prodia Widyahusada
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Prodia Widyahusada 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 Prodia Widyahusada 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 Prodia Widyahusada Tbk, you can compare the effects of market volatilities on Dow Jones and Prodia Widyahusada 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 Prodia Widyahusada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Prodia Widyahusada.
Diversification Opportunities for Dow Jones and Prodia Widyahusada
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Prodia is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Prodia Widyahusada Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prodia Widyahusada 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 Prodia Widyahusada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prodia Widyahusada Tbk has no effect on the direction of Dow Jones i.e., Dow Jones and Prodia Widyahusada go up and down completely randomly.
Pair Corralation between Dow Jones and Prodia Widyahusada
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.7 times more return on investment than Prodia Widyahusada. However, Dow Jones Industrial is 1.43 times less risky than Prodia Widyahusada. It trades about 0.26 of its potential returns per unit of risk. Prodia Widyahusada Tbk is currently generating about -0.18 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Prodia Widyahusada Tbk
Performance |
| Timeline |
Dow Jones and Prodia Widyahusada Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Prodia Widyahusada Tbk
Pair trading matchups for Prodia Widyahusada
Pair Trading with Dow Jones and Prodia Widyahusada
The main advantage of trading using opposite Dow Jones and Prodia Widyahusada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Prodia Widyahusada 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 Prodia Widyahusada will offset losses from the drop in Prodia Widyahusada's long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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