Correlation Between Bank BRISyariah and Krakatau Steel
Can any of the company-specific risk be diversified away by investing in both Bank BRISyariah and Krakatau 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 Bank BRISyariah and Krakatau Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank BRISyariah Tbk and Krakatau Steel Persero, you can compare the effects of market volatilities on Bank BRISyariah and Krakatau 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 Bank BRISyariah with a short position of Krakatau Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank BRISyariah and Krakatau Steel.
Diversification Opportunities for Bank BRISyariah and Krakatau Steel
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Krakatau is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bank BRISyariah Tbk and Krakatau Steel Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krakatau Steel Persero and Bank BRISyariah 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 Bank BRISyariah Tbk are associated (or correlated) with Krakatau Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krakatau Steel Persero has no effect on the direction of Bank BRISyariah i.e., Bank BRISyariah and Krakatau Steel go up and down completely randomly.
Pair Corralation between Bank BRISyariah and Krakatau Steel
Assuming the 90 days trading horizon Bank BRISyariah Tbk is expected to generate 0.96 times more return on investment than Krakatau Steel. However, Bank BRISyariah Tbk is 1.04 times less risky than Krakatau Steel. It trades about -0.02 of its potential returns per unit of risk. Krakatau Steel Persero is currently generating about -0.33 per unit of risk. If you would invest 296,000 in Bank BRISyariah Tbk on August 31, 2024 and sell it today you would lose (5,000) from holding Bank BRISyariah Tbk or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank BRISyariah Tbk vs. Krakatau Steel Persero
Performance |
| Timeline |
| Bank BRISyariah Tbk |
| Krakatau Steel Persero |
Bank BRISyariah and Krakatau Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank BRISyariah and Krakatau Steel
The main advantage of trading using opposite Bank BRISyariah and Krakatau Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank BRISyariah position performs unexpectedly, Krakatau 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 Krakatau Steel will offset losses from the drop in Krakatau Steel's long position.| Bank BRISyariah vs. Aneka Tambang Persero | Bank BRISyariah vs. Sido Muncul PT | Bank BRISyariah vs. Indofood Cbp Sukses | Bank BRISyariah vs. Bank Tabungan Pensiunan |
| Krakatau Steel vs. Perusahaan Gas Negara | Krakatau Steel vs. Vale Indonesia Tbk | Krakatau Steel vs. Telkom Indonesia Tbk | Krakatau Steel vs. Mitra Pinasthika Mustika |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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