Correlation Between Krakatau Steel and Arkadia Digital
Can any of the company-specific risk be diversified away by investing in both Krakatau Steel and Arkadia Digital 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 Arkadia Digital 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 Arkadia Digital Media, you can compare the effects of market volatilities on Krakatau Steel and Arkadia Digital 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 Arkadia Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krakatau Steel and Arkadia Digital.
Diversification Opportunities for Krakatau Steel and Arkadia Digital
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Krakatau and Arkadia is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Krakatau Steel Persero and Arkadia Digital Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkadia Digital Media 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 Arkadia Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkadia Digital Media has no effect on the direction of Krakatau Steel i.e., Krakatau Steel and Arkadia Digital go up and down completely randomly.
Pair Corralation between Krakatau Steel and Arkadia Digital
Assuming the 90 days trading horizon Krakatau Steel Persero is expected to under-perform the Arkadia Digital. In addition to that, Krakatau Steel is 1.11 times more volatile than Arkadia Digital Media. It trades about -0.47 of its total potential returns per unit of risk. Arkadia Digital Media is currently generating about -0.11 per unit of volatility. If you would invest 1,500 in Arkadia Digital Media on August 24, 2024 and sell it today you would lose (100.00) from holding Arkadia Digital Media or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krakatau Steel Persero vs. Arkadia Digital Media
Performance |
| Timeline |
| Krakatau Steel Persero |
| Arkadia Digital Media |
Krakatau Steel and Arkadia Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krakatau Steel and Arkadia Digital
The main advantage of trading using opposite Krakatau Steel and Arkadia Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krakatau Steel position performs unexpectedly, Arkadia Digital 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 Arkadia Digital will offset losses from the drop in Arkadia Digital's long position.| Krakatau Steel vs. Kedaung Indah Can | Krakatau Steel vs. Langgeng Makmur Industri | Krakatau Steel vs. Kabelindo Murni Tbk | Krakatau Steel vs. Champion Pacific Indonesia |
| Arkadia Digital vs. Electronic City Indonesia | Arkadia Digital vs. MD Pictures Tbk | Arkadia Digital vs. Bintang Oto Global | Arkadia Digital vs. Graha Layar Prima |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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