Correlation Between KRAKATAU STEEL and ALGOMA STEEL
Can any of the company-specific risk be diversified away by investing in both KRAKATAU STEEL and ALGOMA 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 KRAKATAU STEEL and ALGOMA STEEL 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 ALGOMA STEEL GROUP, you can compare the effects of market volatilities on KRAKATAU STEEL and ALGOMA 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 KRAKATAU STEEL with a short position of ALGOMA STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRAKATAU STEEL and ALGOMA STEEL.
Diversification Opportunities for KRAKATAU STEEL and ALGOMA STEEL
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KRAKATAU and ALGOMA is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding KRAKATAU STEEL B and ALGOMA STEEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALGOMA STEEL GROUP 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 ALGOMA STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALGOMA STEEL GROUP has no effect on the direction of KRAKATAU STEEL i.e., KRAKATAU STEEL and ALGOMA STEEL go up and down completely randomly.
Pair Corralation between KRAKATAU STEEL and ALGOMA STEEL
If you would invest 0.60 in KRAKATAU STEEL B on September 14, 2024 and sell it today you would earn a total of 0.00 from holding KRAKATAU STEEL B or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KRAKATAU STEEL B vs. ALGOMA STEEL GROUP
Performance |
| Timeline |
| KRAKATAU STEEL B |
| ALGOMA STEEL GROUP |
KRAKATAU STEEL and ALGOMA STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KRAKATAU STEEL and ALGOMA STEEL
The main advantage of trading using opposite KRAKATAU STEEL and ALGOMA STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRAKATAU STEEL position performs unexpectedly, ALGOMA 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 ALGOMA STEEL will offset losses from the drop in ALGOMA STEEL'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 |
| ALGOMA STEEL vs. ArcelorMittal | ALGOMA STEEL vs. NIPPON STEEL SPADR | ALGOMA STEEL vs. Reliance Steel Aluminum | ALGOMA STEEL 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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