Correlation Between PT Global and Nippon Steel
Can any of the company-specific risk be diversified away by investing in both PT Global and Nippon Steel 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 Global and Nippon Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Global Mediacom and Nippon Steel, you can compare the effects of market volatilities on PT Global and Nippon Steel 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 Global with a short position of Nippon Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Global and Nippon Steel.
Diversification Opportunities for PT Global and Nippon Steel
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between 06L and Nippon is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding PT Global Mediacom and Nippon Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Steel and PT Global 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 Global Mediacom are associated (or correlated) with Nippon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Steel has no effect on the direction of PT Global i.e., PT Global and Nippon Steel go up and down completely randomly.
Pair Corralation between PT Global and Nippon Steel
Assuming the 90 days trading horizon PT Global Mediacom is expected to generate 7.79 times more return on investment than Nippon Steel. However, PT Global is 7.79 times more volatile than Nippon Steel. It trades about 0.03 of its potential returns per unit of risk. Nippon Steel is currently generating about -0.01 per unit of risk. If you would invest 1.00 in PT Global Mediacom on September 14, 2024 and sell it today you would lose (0.25) from holding PT Global Mediacom or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Global Mediacom vs. Nippon Steel
Performance |
| Timeline |
| PT Global Mediacom |
| Nippon Steel |
PT Global and Nippon Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Global and Nippon Steel
The main advantage of trading using opposite PT Global and Nippon Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Global position performs unexpectedly, Nippon Steel 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 Nippon Steel will offset losses from the drop in Nippon Steel's long position.| PT Global vs. The Walt Disney | PT Global vs. Charter Communications | PT Global vs. Warner Music Group | PT Global vs. Superior Plus Corp |
| Nippon Steel vs. Cars Inc | Nippon Steel vs. Motorcar Parts of | Nippon Steel vs. GRUPO CARSO A1 | Nippon Steel vs. CARSALESCOM |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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