Correlation Between Krakatau Steel and Fortune Mate
Can any of the company-specific risk be diversified away by investing in both Krakatau Steel and Fortune Mate 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 Fortune Mate 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 Fortune Mate Indonesia, you can compare the effects of market volatilities on Krakatau Steel and Fortune Mate 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 Fortune Mate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krakatau Steel and Fortune Mate.
Diversification Opportunities for Krakatau Steel and Fortune Mate
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Krakatau and Fortune is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Krakatau Steel Persero and Fortune Mate Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Mate Indonesia 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 Fortune Mate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Mate Indonesia has no effect on the direction of Krakatau Steel i.e., Krakatau Steel and Fortune Mate go up and down completely randomly.
Pair Corralation between Krakatau Steel and Fortune Mate
Assuming the 90 days trading horizon Krakatau Steel is expected to generate 16.11 times less return on investment than Fortune Mate. But when comparing it to its historical volatility, Krakatau Steel Persero is 1.83 times less risky than Fortune Mate. It trades about 0.02 of its potential returns per unit of risk. Fortune Mate Indonesia is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 31,600 in Fortune Mate Indonesia on September 12, 2024 and sell it today you would earn a total of 22,900 from holding Fortune Mate Indonesia or generate 72.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krakatau Steel Persero vs. Fortune Mate Indonesia
Performance |
| Timeline |
| Krakatau Steel Persero |
| Fortune Mate Indonesia |
Krakatau Steel and Fortune Mate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krakatau Steel and Fortune Mate
The main advantage of trading using opposite Krakatau Steel and Fortune Mate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krakatau Steel position performs unexpectedly, Fortune Mate 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 Fortune Mate will offset losses from the drop in Fortune Mate's long position.| Krakatau Steel vs. Kedaung Indah Can | Krakatau Steel vs. Kabelindo Murni Tbk | Krakatau Steel vs. Champion Pacific Indonesia | Krakatau Steel vs. Bhuwanatala Indah Permai |
| Fortune Mate vs. Kedawung Setia Industrial | Fortune Mate vs. First Media Tbk | Fortune Mate vs. Lion Metal Works | Fortune Mate vs. Garuda Metalindo Tbk |
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 CEOs Directory module to screen CEOs from public companies around the world.
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