Correlation Between KRAKATAU STEEL and PT Global
Can any of the company-specific risk be diversified away by investing in both KRAKATAU STEEL and PT Global 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 KRAKATAU STEEL and PT Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KRAKATAU STEEL B and PT Global Mediacom, you can compare the effects of market volatilities on KRAKATAU STEEL and PT Global 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 KRAKATAU STEEL with a short position of PT Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRAKATAU STEEL and PT Global.
Diversification Opportunities for KRAKATAU STEEL and PT Global
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KRAKATAU and 06L is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding KRAKATAU STEEL B and PT Global Mediacom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Global Mediacom and KRAKATAU STEEL 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 KRAKATAU STEEL B are associated (or correlated) with PT Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Global Mediacom has no effect on the direction of KRAKATAU STEEL i.e., KRAKATAU STEEL and PT Global go up and down completely randomly.
Pair Corralation between KRAKATAU STEEL and PT Global
Assuming the 90 days trading horizon KRAKATAU STEEL is expected to generate 1.07 times less return on investment than PT Global. But when comparing it to its historical volatility, KRAKATAU STEEL B is 1.5 times less risky than PT Global. It trades about 0.05 of its potential returns per unit of risk. PT Global Mediacom is currently generating about 0.03 of returns per unit of risk over similar time horizon. 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KRAKATAU STEEL B vs. PT Global Mediacom
Performance |
| Timeline |
| KRAKATAU STEEL B |
| PT Global Mediacom |
KRAKATAU STEEL and PT Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KRAKATAU STEEL and PT Global
The main advantage of trading using opposite KRAKATAU STEEL and PT Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRAKATAU STEEL position performs unexpectedly, PT Global 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 PT Global will offset losses from the drop in PT Global's long position.| KRAKATAU STEEL vs. QURATE RETAIL INC | KRAKATAU STEEL vs. Marie Brizard Wine | KRAKATAU STEEL vs. MARKET VECTR RETAIL | KRAKATAU STEEL vs. COSTCO WHOLESALE CDR |
| PT Global vs. The Walt Disney | PT Global vs. Charter Communications | PT Global vs. Warner Music Group | PT Global vs. Superior Plus Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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