Correlation Between IDeA Indonesia and Dow Jones
Can any of the company-specific risk be diversified away by investing in both IDeA Indonesia and Dow Jones 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 IDeA Indonesia and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDeA Indonesia Akademi and Dow Jones Industrial, you can compare the effects of market volatilities on IDeA Indonesia and Dow Jones 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 IDeA Indonesia with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDeA Indonesia and Dow Jones.
Diversification Opportunities for IDeA Indonesia and Dow Jones
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IDeA and Dow is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding IDeA Indonesia Akademi and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and IDeA Indonesia 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 IDeA Indonesia Akademi are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of IDeA Indonesia i.e., IDeA Indonesia and Dow Jones go up and down completely randomly.
Pair Corralation between IDeA Indonesia and Dow Jones
Assuming the 90 days trading horizon IDeA Indonesia Akademi is expected to under-perform the Dow Jones. In addition to that, IDeA Indonesia is 6.83 times more volatile than Dow Jones Industrial. It trades about -0.03 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of volatility. If you would invest 3,406,633 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 1,084,432 from holding Dow Jones Industrial or generate 31.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.24% |
| Values | Daily Returns |
IDeA Indonesia Akademi vs. Dow Jones Industrial
Performance |
| Timeline |
IDeA Indonesia and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
IDeA Indonesia Akademi
Pair trading matchups for IDeA Indonesia
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with IDeA Indonesia and Dow Jones
The main advantage of trading using opposite IDeA Indonesia and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDeA Indonesia position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| IDeA Indonesia vs. PT Hasnur Internasional | IDeA Indonesia vs. GTS Internasional Tbk | IDeA Indonesia vs. Geoprima Solusi Tbk | IDeA Indonesia vs. Ace Oldfields PT |
| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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