Correlation Between Champion Pacific and Krakatau Steel
Can any of the company-specific risk be diversified away by investing in both Champion Pacific 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 Champion Pacific and Krakatau Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Pacific Indonesia and Krakatau Steel Persero, you can compare the effects of market volatilities on Champion Pacific 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 Champion Pacific with a short position of Krakatau Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Pacific and Krakatau Steel.
Diversification Opportunities for Champion Pacific and Krakatau Steel
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Champion and Krakatau is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Champion Pacific Indonesia 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 Champion Pacific 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 Champion Pacific Indonesia 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 Champion Pacific i.e., Champion Pacific and Krakatau Steel go up and down completely randomly.
Pair Corralation between Champion Pacific and Krakatau Steel
Assuming the 90 days trading horizon Champion Pacific Indonesia is expected to generate 0.43 times more return on investment than Krakatau Steel. However, Champion Pacific Indonesia is 2.34 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 -0.07 per unit of risk. If you would invest 47,600 in Champion Pacific Indonesia on August 27, 2024 and sell it today you would earn a total of 2,900 from holding Champion Pacific Indonesia or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Champion Pacific Indonesia vs. Krakatau Steel Persero
Performance |
| Timeline |
| Champion Pacific Ind |
| Krakatau Steel Persero |
Champion Pacific and Krakatau Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Pacific and Krakatau Steel
The main advantage of trading using opposite Champion Pacific and Krakatau Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Pacific 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.| Champion Pacific vs. Intanwijaya Internasional Tbk | Champion Pacific vs. Asiaplast Industries Tbk | Champion Pacific vs. Trias Sentosa Tbk | Champion Pacific vs. Lotte Chemical Titan |
| Krakatau Steel vs. Timah Persero Tbk | Krakatau Steel vs. Garuda Indonesia Persero | Krakatau Steel vs. Jasa Marga Tbk | Krakatau Steel vs. Semen Indonesia Persero |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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