Correlation Between DAX Index and SUMMARECON AGUNG

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Can any of the company-specific risk be diversified away by investing in both DAX Index and SUMMARECON AGUNG 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 DAX Index and SUMMARECON AGUNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAX Index and SUMMARECON AGUNG, you can compare the effects of market volatilities on DAX Index and SUMMARECON AGUNG 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 DAX Index with a short position of SUMMARECON AGUNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and SUMMARECON AGUNG.

Diversification Opportunities for DAX Index and SUMMARECON AGUNG

-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between DAX and SUMMARECON is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and SUMMARECON AGUNG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUMMARECON AGUNG and DAX Index 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 DAX Index are associated (or correlated) with SUMMARECON AGUNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUMMARECON AGUNG has no effect on the direction of DAX Index i.e., DAX Index and SUMMARECON AGUNG go up and down completely randomly.
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Pair Corralation between DAX Index and SUMMARECON AGUNG

Assuming the 90 days trading horizon DAX Index is expected to generate 0.1 times more return on investment than SUMMARECON AGUNG. However, DAX Index is 10.41 times less risky than SUMMARECON AGUNG. It trades about 0.38 of its potential returns per unit of risk. SUMMARECON AGUNG is currently generating about -0.06 per unit of risk. If you would invest  1,996,986  in DAX Index on October 20, 2024 and sell it today you would earn a total of  93,353  from holding DAX Index or generate 4.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

DAX Index  vs.  SUMMARECON AGUNG

 Performance 
       Timeline  

DAX Index and SUMMARECON AGUNG Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DAX Index and SUMMARECON AGUNG

The main advantage of trading using opposite DAX Index and SUMMARECON AGUNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, SUMMARECON AGUNG 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 SUMMARECON AGUNG will offset losses from the drop in SUMMARECON AGUNG's long position.
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The idea behind DAX Index and SUMMARECON AGUNG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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