Correlation Between Paramita Bangun and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Paramita Bangun 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 Paramita Bangun and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paramita Bangun Sarana and Dow Jones Industrial, you can compare the effects of market volatilities on Paramita Bangun 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 Paramita Bangun with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramita Bangun and Dow Jones.
Diversification Opportunities for Paramita Bangun and Dow Jones
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Paramita and Dow is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Paramita Bangun Sarana 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 Paramita Bangun 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 Paramita Bangun Sarana 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 Paramita Bangun i.e., Paramita Bangun and Dow Jones go up and down completely randomly.
Pair Corralation between Paramita Bangun and Dow Jones
Assuming the 90 days trading horizon Paramita Bangun Sarana is expected to generate 2.17 times more return on investment than Dow Jones. However, Paramita Bangun is 2.17 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 23,815 in Paramita Bangun Sarana on August 31, 2024 and sell it today you would earn a total of 10,385 from holding Paramita Bangun Sarana or generate 43.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.72% |
| Values | Daily Returns |
Paramita Bangun Sarana vs. Dow Jones Industrial
Performance |
| Timeline |
Paramita Bangun and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Paramita Bangun Sarana
Pair trading matchups for Paramita Bangun
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Paramita Bangun and Dow Jones
The main advantage of trading using opposite Paramita Bangun and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramita Bangun 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.| Paramita Bangun vs. Nusa Raya Cipta | Paramita Bangun vs. Indonesia Pondasi Raya | Paramita Bangun vs. Pelayaran Nelly Dwi | Paramita Bangun vs. PP Presisi Tbk |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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