Correlation Between Pentamaster Bhd and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Pentamaster Bhd 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 Pentamaster Bhd and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentamaster Bhd and Dow Jones Industrial, you can compare the effects of market volatilities on Pentamaster Bhd 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 Pentamaster Bhd with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentamaster Bhd and Dow Jones.
Diversification Opportunities for Pentamaster Bhd and Dow Jones
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Pentamaster and Dow is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Pentamaster Bhd 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 Pentamaster Bhd 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 Pentamaster Bhd 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 Pentamaster Bhd i.e., Pentamaster Bhd and Dow Jones go up and down completely randomly.
Pair Corralation between Pentamaster Bhd and Dow Jones
Assuming the 90 days trading horizon Pentamaster Bhd is expected to generate 3.74 times more return on investment than Dow Jones. However, Pentamaster Bhd is 3.74 times more volatile than Dow Jones Industrial. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.05 per unit of risk. If you would invest 343.00 in Pentamaster Bhd on September 25, 2024 and sell it today you would earn a total of 61.00 from holding Pentamaster Bhd or generate 17.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Pentamaster Bhd vs. Dow Jones Industrial
Performance |
Timeline |
Pentamaster Bhd and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Pentamaster Bhd
Pair trading matchups for Pentamaster Bhd
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Pentamaster Bhd and Dow Jones
The main advantage of trading using opposite Pentamaster Bhd and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentamaster Bhd 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.Pentamaster Bhd vs. Malayan Banking Bhd | Pentamaster Bhd vs. Public Bank Bhd | Pentamaster Bhd vs. Petronas Chemicals Group | Pentamaster Bhd vs. Tenaga Nasional Bhd |
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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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