Correlation Between Krakatau Steel and Indointernet Tbk
Can any of the company-specific risk be diversified away by investing in both Krakatau Steel and Indointernet Tbk 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 Indointernet Tbk 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 Indointernet Tbk PT, you can compare the effects of market volatilities on Krakatau Steel and Indointernet Tbk 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 Indointernet Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krakatau Steel and Indointernet Tbk.
Diversification Opportunities for Krakatau Steel and Indointernet Tbk
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Krakatau and Indointernet is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Krakatau Steel Persero and Indointernet Tbk PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indointernet 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 Indointernet Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indointernet Tbk has no effect on the direction of Krakatau Steel i.e., Krakatau Steel and Indointernet Tbk go up and down completely randomly.
Pair Corralation between Krakatau Steel and Indointernet Tbk
Assuming the 90 days trading horizon Krakatau Steel Persero is expected to generate 0.79 times more return on investment than Indointernet Tbk. However, Krakatau Steel Persero is 1.27 times less risky than Indointernet Tbk. It trades about -0.01 of its potential returns per unit of risk. Indointernet Tbk PT is currently generating about -0.02 per unit of risk. If you would invest 15,300 in Krakatau Steel Persero on August 27, 2024 and sell it today you would lose (3,300) from holding Krakatau Steel Persero or give up 21.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krakatau Steel Persero vs. Indointernet Tbk PT
Performance |
| Timeline |
| Krakatau Steel Persero |
| Indointernet Tbk |
Krakatau Steel and Indointernet Tbk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krakatau Steel and Indointernet Tbk
The main advantage of trading using opposite Krakatau Steel and Indointernet Tbk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krakatau Steel position performs unexpectedly, Indointernet Tbk 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 Indointernet Tbk will offset losses from the drop in Indointernet Tbk'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 |
| Indointernet Tbk vs. Multipolar Technology Tbk | Indointernet Tbk vs. Digital Mediatama Maxima | Indointernet Tbk vs. M Cash Integrasi | Indointernet Tbk vs. NFC Indonesia PT |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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