Correlation Between Impack Pratama and Steel Pipe
Can any of the company-specific risk be diversified away by investing in both Impack Pratama and Steel Pipe 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 Impack Pratama and Steel Pipe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Impack Pratama Industri and Steel Pipe Industry, you can compare the effects of market volatilities on Impack Pratama and Steel Pipe 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 Impack Pratama with a short position of Steel Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impack Pratama and Steel Pipe.
Diversification Opportunities for Impack Pratama and Steel Pipe
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Impack and Steel is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Impack Pratama Industri and Steel Pipe Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Pipe Industry and Impack Pratama 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 Impack Pratama Industri are associated (or correlated) with Steel Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Pipe Industry has no effect on the direction of Impack Pratama i.e., Impack Pratama and Steel Pipe go up and down completely randomly.
Pair Corralation between Impack Pratama and Steel Pipe
Assuming the 90 days trading horizon Impack Pratama Industri is expected to generate 1.38 times more return on investment than Steel Pipe. However, Impack Pratama is 1.38 times more volatile than Steel Pipe Industry. It trades about 0.03 of its potential returns per unit of risk. Steel Pipe Industry is currently generating about 0.03 per unit of risk. If you would invest 27,015 in Impack Pratama Industri on September 3, 2024 and sell it today you would earn a total of 6,585 from holding Impack Pratama Industri or generate 24.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Impack Pratama Industri vs. Steel Pipe Industry
Performance |
| Timeline |
| Impack Pratama Industri |
| Steel Pipe Industry |
Impack Pratama and Steel Pipe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Impack Pratama and Steel Pipe
The main advantage of trading using opposite Impack Pratama and Steel Pipe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impack Pratama position performs unexpectedly, Steel Pipe 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 Steel Pipe will offset losses from the drop in Steel Pipe's long position.| Impack Pratama vs. Timah Persero Tbk | Impack Pratama vs. Semen Indonesia Persero | Impack Pratama vs. Mitra Pinasthika Mustika | Impack Pratama vs. Jakarta Int Hotels |
| Steel Pipe vs. Timah Persero Tbk | Steel Pipe vs. Semen Indonesia Persero | Steel Pipe vs. Mitra Pinasthika Mustika | Steel Pipe vs. Jakarta Int Hotels |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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