Correlation Between KRAKATAU STEEL and Amneal Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both KRAKATAU STEEL and Amneal Pharmaceuticals 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 Amneal Pharmaceuticals 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 Amneal Pharmaceuticals, you can compare the effects of market volatilities on KRAKATAU STEEL and Amneal Pharmaceuticals 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 Amneal Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRAKATAU STEEL and Amneal Pharmaceuticals.
Diversification Opportunities for KRAKATAU STEEL and Amneal Pharmaceuticals
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KRAKATAU and Amneal is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding KRAKATAU STEEL B and Amneal Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amneal Pharmaceuticals 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 Amneal Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amneal Pharmaceuticals has no effect on the direction of KRAKATAU STEEL i.e., KRAKATAU STEEL and Amneal Pharmaceuticals go up and down completely randomly.
Pair Corralation between KRAKATAU STEEL and Amneal Pharmaceuticals
Assuming the 90 days trading horizon KRAKATAU STEEL is expected to generate 1.81 times less return on investment than Amneal Pharmaceuticals. In addition to that, KRAKATAU STEEL is 1.78 times more volatile than Amneal Pharmaceuticals. It trades about 0.03 of its total potential returns per unit of risk. Amneal Pharmaceuticals is currently generating about 0.08 per unit of volatility. If you would invest 220.00 in Amneal Pharmaceuticals on September 26, 2024 and sell it today you would earn a total of 510.00 from holding Amneal Pharmaceuticals or generate 231.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
KRAKATAU STEEL B vs. Amneal Pharmaceuticals
Performance |
| Timeline |
| KRAKATAU STEEL B |
| Amneal Pharmaceuticals |
KRAKATAU STEEL and Amneal Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KRAKATAU STEEL and Amneal Pharmaceuticals
The main advantage of trading using opposite KRAKATAU STEEL and Amneal Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRAKATAU STEEL position performs unexpectedly, Amneal Pharmaceuticals 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 Amneal Pharmaceuticals will offset losses from the drop in Amneal Pharmaceuticals' long position.| KRAKATAU STEEL vs. Apple Inc | KRAKATAU STEEL vs. Apple Inc | KRAKATAU STEEL vs. Microsoft | KRAKATAU STEEL vs. Microsoft |
| Amneal Pharmaceuticals vs. KRAKATAU STEEL B | Amneal Pharmaceuticals vs. BLUESCOPE STEEL | Amneal Pharmaceuticals vs. LPKF Laser Electronics | Amneal Pharmaceuticals vs. Meiko Electronics 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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