Correlation Between Malacca Trust and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Malacca Trust 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 Malacca Trust and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malacca Trust Wuwungan and Dow Jones Industrial, you can compare the effects of market volatilities on Malacca Trust 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 Malacca Trust with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malacca Trust and Dow Jones.
Diversification Opportunities for Malacca Trust and Dow Jones
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Malacca and Dow is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Malacca Trust Wuwungan 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 Malacca Trust 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 Malacca Trust Wuwungan 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 Malacca Trust i.e., Malacca Trust and Dow Jones go up and down completely randomly.
Pair Corralation between Malacca Trust and Dow Jones
Assuming the 90 days trading horizon Malacca Trust Wuwungan is expected to generate 2.01 times more return on investment than Dow Jones. However, Malacca Trust is 2.01 times more volatile than Dow Jones Industrial. It trades about 0.19 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of risk. If you would invest 15,600 in Malacca Trust Wuwungan on August 30, 2024 and sell it today you would earn a total of 1,200 from holding Malacca Trust Wuwungan or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Malacca Trust Wuwungan vs. Dow Jones Industrial
Performance |
| Timeline |
Malacca Trust and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Malacca Trust Wuwungan
Pair trading matchups for Malacca Trust
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Malacca Trust and Dow Jones
The main advantage of trading using opposite Malacca Trust and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malacca Trust 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.| Malacca Trust vs. Bank Cimb Niaga | Malacca Trust vs. Indosat Tbk | Malacca Trust vs. Astra Agro Lestari | Malacca Trust vs. Indocement Tunggal Prakarsa |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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