Correlation Between Krakatau Steel and Bank BRISyariah
Can any of the company-specific risk be diversified away by investing in both Krakatau Steel and Bank BRISyariah 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 Krakatau Steel and Bank BRISyariah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Krakatau Steel Persero and Bank BRISyariah Tbk, you can compare the effects of market volatilities on Krakatau Steel and Bank BRISyariah 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 Krakatau Steel with a short position of Bank BRISyariah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krakatau Steel and Bank BRISyariah.
Diversification Opportunities for Krakatau Steel and Bank BRISyariah
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Krakatau and Bank is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Krakatau Steel Persero and Bank BRISyariah Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank BRISyariah Tbk and Krakatau Steel 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 Krakatau Steel Persero are associated (or correlated) with Bank BRISyariah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank BRISyariah Tbk has no effect on the direction of Krakatau Steel i.e., Krakatau Steel and Bank BRISyariah go up and down completely randomly.
Pair Corralation between Krakatau Steel and Bank BRISyariah
Assuming the 90 days trading horizon Krakatau Steel Persero is expected to under-perform the Bank BRISyariah. In addition to that, Krakatau Steel is 1.04 times more volatile than Bank BRISyariah Tbk. It trades about -0.33 of its total potential returns per unit of risk. Bank BRISyariah Tbk is currently generating about -0.02 per unit of volatility. If you would invest 296,000 in Bank BRISyariah Tbk on August 31, 2024 and sell it today you would lose (5,000) from holding Bank BRISyariah Tbk or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krakatau Steel Persero vs. Bank BRISyariah Tbk
Performance |
| Timeline |
| Krakatau Steel Persero |
| Bank BRISyariah Tbk |
Krakatau Steel and Bank BRISyariah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krakatau Steel and Bank BRISyariah
The main advantage of trading using opposite Krakatau Steel and Bank BRISyariah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krakatau Steel position performs unexpectedly, Bank BRISyariah 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 Bank BRISyariah will offset losses from the drop in Bank BRISyariah's long position.| Krakatau Steel vs. Perusahaan Gas Negara | Krakatau Steel vs. Vale Indonesia Tbk | Krakatau Steel vs. Telkom Indonesia Tbk | Krakatau Steel vs. Mitra Pinasthika Mustika |
| Bank BRISyariah vs. Aneka Tambang Persero | Bank BRISyariah vs. Sido Muncul PT | Bank BRISyariah vs. Indofood Cbp Sukses | Bank BRISyariah vs. Bank Tabungan Pensiunan |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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