Correlation Between Krakatau Steel and Bukit Uluwatu
Can any of the company-specific risk be diversified away by investing in both Krakatau Steel and Bukit Uluwatu 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 Bukit Uluwatu 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 Bukit Uluwatu Villa, you can compare the effects of market volatilities on Krakatau Steel and Bukit Uluwatu 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 Bukit Uluwatu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krakatau Steel and Bukit Uluwatu.
Diversification Opportunities for Krakatau Steel and Bukit Uluwatu
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Krakatau and Bukit is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Krakatau Steel Persero and Bukit Uluwatu Villa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bukit Uluwatu Villa 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 Bukit Uluwatu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bukit Uluwatu Villa has no effect on the direction of Krakatau Steel i.e., Krakatau Steel and Bukit Uluwatu go up and down completely randomly.
Pair Corralation between Krakatau Steel and Bukit Uluwatu
Assuming the 90 days trading horizon Krakatau Steel Persero is expected to under-perform the Bukit Uluwatu. In addition to that, Krakatau Steel is 1.17 times more volatile than Bukit Uluwatu Villa. It trades about -0.02 of its total potential returns per unit of risk. Bukit Uluwatu Villa is currently generating about 0.01 per unit of volatility. If you would invest 6,000 in Bukit Uluwatu Villa on August 26, 2024 and sell it today you would lose (200.00) from holding Bukit Uluwatu Villa or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krakatau Steel Persero vs. Bukit Uluwatu Villa
Performance |
| Timeline |
| Krakatau Steel Persero |
| Bukit Uluwatu Villa |
Krakatau Steel and Bukit Uluwatu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krakatau Steel and Bukit Uluwatu
The main advantage of trading using opposite Krakatau Steel and Bukit Uluwatu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krakatau Steel position performs unexpectedly, Bukit Uluwatu 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 Bukit Uluwatu will offset losses from the drop in Bukit Uluwatu's long position.| Krakatau Steel vs. Kedaung Indah Can | Krakatau Steel vs. Langgeng Makmur Industri | Krakatau Steel vs. Kabelindo Murni Tbk | Krakatau Steel vs. Mustika Ratu Tbk |
| Bukit Uluwatu vs. Surya Citra Media | Bukit Uluwatu vs. Indosterling Technomedia Tbk | Bukit Uluwatu vs. Alumindo Light Metal | Bukit Uluwatu vs. Krakatau Steel 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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