Correlation Between Pan Brothers and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Pan Brothers 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 Pan Brothers and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pan Brothers Tbk and Dow Jones Industrial, you can compare the effects of market volatilities on Pan Brothers 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 Pan Brothers with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan Brothers and Dow Jones.
Diversification Opportunities for Pan Brothers and Dow Jones
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pan and Dow is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Pan Brothers Tbk 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 Pan Brothers 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 Pan Brothers Tbk 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 Pan Brothers i.e., Pan Brothers and Dow Jones go up and down completely randomly.
Pair Corralation between Pan Brothers and Dow Jones
Assuming the 90 days trading horizon Pan Brothers Tbk is expected to generate 3.49 times more return on investment than Dow Jones. However, Pan Brothers is 3.49 times more volatile than Dow Jones Industrial. It trades about 0.17 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of risk. If you would invest 1,900 in Pan Brothers Tbk on August 29, 2024 and sell it today you would earn a total of 400.00 from holding Pan Brothers Tbk or generate 21.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Pan Brothers Tbk vs. Dow Jones Industrial
Performance |
| Timeline |
Pan Brothers and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Pan Brothers Tbk
Pair trading matchups for Pan Brothers
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Pan Brothers and Dow Jones
The main advantage of trading using opposite Pan Brothers and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan Brothers 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.| Pan Brothers vs. Pembangunan Jaya Ancol | Pan Brothers vs. Panorama Sentrawisata Tbk | Pan Brothers vs. Millennium Pharmacon International | Pan Brothers vs. Tempo Inti Media |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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