Correlation Between Steel Pipe and Polychem Indonesia
Can any of the company-specific risk be diversified away by investing in both Steel Pipe and Polychem Indonesia 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 Steel Pipe and Polychem Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Pipe Industry and Polychem Indonesia Tbk, you can compare the effects of market volatilities on Steel Pipe and Polychem Indonesia 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 Steel Pipe with a short position of Polychem Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Pipe and Polychem Indonesia.
Diversification Opportunities for Steel Pipe and Polychem Indonesia
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Steel and Polychem is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Steel Pipe Industry and Polychem Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polychem Indonesia Tbk and Steel Pipe 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 Steel Pipe Industry are associated (or correlated) with Polychem Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polychem Indonesia Tbk has no effect on the direction of Steel Pipe i.e., Steel Pipe and Polychem Indonesia go up and down completely randomly.
Pair Corralation between Steel Pipe and Polychem Indonesia
Assuming the 90 days trading horizon Steel Pipe Industry is expected to generate 0.4 times more return on investment than Polychem Indonesia. However, Steel Pipe Industry is 2.49 times less risky than Polychem Indonesia. It trades about 0.01 of its potential returns per unit of risk. Polychem Indonesia Tbk is currently generating about 0.0 per unit of risk. If you would invest 28,110 in Steel Pipe Industry on September 3, 2024 and sell it today you would earn a total of 290.00 from holding Steel Pipe Industry or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Pipe Industry vs. Polychem Indonesia Tbk
Performance |
| Timeline |
| Steel Pipe Industry |
| Polychem Indonesia Tbk |
Steel Pipe and Polychem Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Pipe and Polychem Indonesia
The main advantage of trading using opposite Steel Pipe and Polychem Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Pipe position performs unexpectedly, Polychem Indonesia 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 Polychem Indonesia will offset losses from the drop in Polychem Indonesia's long position.| Steel Pipe vs. Timah Persero Tbk | Steel Pipe vs. Semen Indonesia Persero | Steel Pipe vs. Mitra Pinasthika Mustika | Steel Pipe vs. Jakarta Int Hotels |
| Polychem Indonesia vs. Gajah Tunggal Tbk | Polychem Indonesia vs. Astra Graphia Tbk | Polychem Indonesia vs. Citra Marga Nusaphala | Polychem Indonesia vs. Sentul City 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |