Correlation Between Steel Pipe and Timah Persero
Can any of the company-specific risk be diversified away by investing in both Steel Pipe and Timah Persero 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 Timah Persero 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 Timah Persero Tbk, you can compare the effects of market volatilities on Steel Pipe and Timah Persero 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 Timah Persero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Pipe and Timah Persero.
Diversification Opportunities for Steel Pipe and Timah Persero
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Steel and Timah is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Steel Pipe Industry and Timah Persero Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timah Persero 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 Timah Persero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timah Persero Tbk has no effect on the direction of Steel Pipe i.e., Steel Pipe and Timah Persero go up and down completely randomly.
Pair Corralation between Steel Pipe and Timah Persero
Assuming the 90 days trading horizon Steel Pipe Industry is expected to generate 0.53 times more return on investment than Timah Persero. However, Steel Pipe Industry is 1.9 times less risky than Timah Persero. It trades about 0.03 of its potential returns per unit of risk. Timah Persero Tbk is currently generating about 0.01 per unit of risk. If you would invest 23,419 in Steel Pipe Industry on September 4, 2024 and sell it today you would earn a total of 4,781 from holding Steel Pipe Industry or generate 20.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Steel Pipe Industry vs. Timah Persero Tbk
Performance |
| Timeline |
| Steel Pipe Industry |
| Timah Persero Tbk |
Steel Pipe and Timah Persero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Pipe and Timah Persero
The main advantage of trading using opposite Steel Pipe and Timah Persero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Pipe position performs unexpectedly, Timah Persero 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 Timah Persero will offset losses from the drop in Timah Persero'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 |
| Timah Persero vs. Vale Indonesia Tbk | Timah Persero vs. Aneka Tambang Persero | Timah Persero vs. Bukit Asam Tbk | Timah Persero vs. Perusahaan Gas Negara |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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