Correlation Between Indointernet Tbk and Krakatau Steel
Can any of the company-specific risk be diversified away by investing in both Indointernet Tbk 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 Indointernet Tbk and Krakatau Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indointernet Tbk PT and Krakatau Steel Persero, you can compare the effects of market volatilities on Indointernet Tbk 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 Indointernet Tbk with a short position of Krakatau Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indointernet Tbk and Krakatau Steel.
Diversification Opportunities for Indointernet Tbk and Krakatau Steel
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Indointernet and Krakatau is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Indointernet Tbk PT 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 Indointernet Tbk 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 Indointernet Tbk PT 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 Indointernet Tbk i.e., Indointernet Tbk and Krakatau Steel go up and down completely randomly.
Pair Corralation between Indointernet Tbk and Krakatau Steel
Assuming the 90 days trading horizon Indointernet Tbk PT is expected to generate 0.65 times more return on investment than Krakatau Steel. However, Indointernet Tbk PT is 1.54 times less risky than Krakatau Steel. It trades about -0.18 of its potential returns per unit of risk. Krakatau Steel Persero is currently generating about -0.36 per unit of risk. If you would invest 416,000 in Indointernet Tbk PT on August 27, 2024 and sell it today you would lose (29,000) from holding Indointernet Tbk PT or give up 6.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indointernet Tbk PT vs. Krakatau Steel Persero
Performance |
| Timeline |
| Indointernet Tbk |
| Krakatau Steel Persero |
Indointernet Tbk and Krakatau Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indointernet Tbk and Krakatau Steel
The main advantage of trading using opposite Indointernet Tbk and Krakatau Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indointernet Tbk 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.| Indointernet Tbk vs. Multipolar Technology Tbk | Indointernet Tbk vs. Digital Mediatama Maxima | Indointernet Tbk vs. M Cash Integrasi | Indointernet Tbk vs. NFC Indonesia PT |
| Krakatau Steel vs. Kedaung Indah Can | Krakatau Steel vs. Langgeng Makmur Industri | Krakatau Steel vs. Kabelindo Murni Tbk | Krakatau Steel vs. Mustika Ratu Tbk |
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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