Correlation Between Media Nusantara and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Media Nusantara 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 Media Nusantara and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Media Nusantara Citra and Dow Jones Industrial, you can compare the effects of market volatilities on Media Nusantara 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 Media Nusantara with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media Nusantara and Dow Jones.
Diversification Opportunities for Media Nusantara and Dow Jones
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Media and Dow is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Media Nusantara Citra 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 Media Nusantara 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 Media Nusantara Citra 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 Media Nusantara i.e., Media Nusantara and Dow Jones go up and down completely randomly.
Pair Corralation between Media Nusantara and Dow Jones
Assuming the 90 days trading horizon Media Nusantara Citra is expected to under-perform the Dow Jones. In addition to that, Media Nusantara is 2.28 times more volatile than Dow Jones Industrial. It trades about -0.07 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of volatility. 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Media Nusantara Citra vs. Dow Jones Industrial
Performance |
| Timeline |
Media Nusantara and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Media Nusantara Citra
Pair trading matchups for Media Nusantara
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Media Nusantara and Dow Jones
The main advantage of trading using opposite Media Nusantara and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media Nusantara 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.| Media Nusantara vs. Mnc Land Tbk | Media Nusantara vs. MNC Vision Networks | Media Nusantara vs. Medikaloka Hermina PT |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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