Correlation Between PT United and Dow Jones
Can any of the company-specific risk be diversified away by investing in both PT United 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 PT United and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT United Tractors and Dow Jones Industrial, you can compare the effects of market volatilities on PT United 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 PT United with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT United and Dow Jones.
Diversification Opportunities for PT United and Dow Jones
Modest diversification
The 3 months correlation between UTY and Dow is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding PT United Tractors 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 PT United 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 PT United Tractors 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 PT United i.e., PT United and Dow Jones go up and down completely randomly.
Pair Corralation between PT United and Dow Jones
Assuming the 90 days horizon PT United Tractors is expected to generate 5.6 times more return on investment than Dow Jones. However, PT United is 5.6 times more volatile than Dow Jones Industrial. It trades about 0.03 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 134.00 in PT United Tractors on September 4, 2024 and sell it today you would earn a total of 17.00 from holding PT United Tractors or generate 12.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
PT United Tractors vs. Dow Jones Industrial
Performance |
| Timeline |
PT United and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
PT United Tractors
Pair trading matchups for PT United
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with PT United and Dow Jones
The main advantage of trading using opposite PT United and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT United 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.| PT United vs. CarsalesCom | PT United vs. EPSILON HEALTHCARE LTD | PT United vs. Treasury Wine Estates | PT United vs. COMMERCIAL VEHICLE |
| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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