Correlation Between KRAKATAU STEEL and AURUBIS AG
Can any of the company-specific risk be diversified away by investing in both KRAKATAU STEEL and AURUBIS AG 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 AURUBIS AG 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 AURUBIS AG UNSPADR, you can compare the effects of market volatilities on KRAKATAU STEEL and AURUBIS AG 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 AURUBIS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRAKATAU STEEL and AURUBIS AG.
Diversification Opportunities for KRAKATAU STEEL and AURUBIS AG
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KRAKATAU and AURUBIS is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding KRAKATAU STEEL B and AURUBIS AG UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AURUBIS AG UNSPADR 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 AURUBIS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AURUBIS AG UNSPADR has no effect on the direction of KRAKATAU STEEL i.e., KRAKATAU STEEL and AURUBIS AG go up and down completely randomly.
Pair Corralation between KRAKATAU STEEL and AURUBIS AG
If you would invest 0.60 in KRAKATAU STEEL B on September 15, 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 | 95.65% |
| Values | Daily Returns |
KRAKATAU STEEL B vs. AURUBIS AG UNSPADR
Performance |
| Timeline |
| KRAKATAU STEEL B |
| AURUBIS AG UNSPADR |
KRAKATAU STEEL and AURUBIS AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KRAKATAU STEEL and AURUBIS AG
The main advantage of trading using opposite KRAKATAU STEEL and AURUBIS AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRAKATAU STEEL position performs unexpectedly, AURUBIS AG 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 AURUBIS AG will offset losses from the drop in AURUBIS AG's long position.| KRAKATAU STEEL vs. Strategic Investments AS | KRAKATAU STEEL vs. BORR DRILLING NEW | KRAKATAU STEEL vs. QBE Insurance Group | KRAKATAU STEEL vs. SLR Investment Corp |
| AURUBIS AG vs. AXWAY SOFTWARE EO | AURUBIS AG vs. RELIANCE STEEL AL | AURUBIS AG vs. KRAKATAU STEEL B | AURUBIS AG vs. Perma Fix Environmental Services |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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