Correlation Between Krakatau Steel and PT Indofood
Can any of the company-specific risk be diversified away by investing in both Krakatau Steel and PT Indofood 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 PT Indofood 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 PT Indofood Sukses, you can compare the effects of market volatilities on Krakatau Steel and PT Indofood 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 PT Indofood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krakatau Steel and PT Indofood.
Diversification Opportunities for Krakatau Steel and PT Indofood
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Krakatau and INDF is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Krakatau Steel Persero and PT Indofood Sukses in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indofood Sukses 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 PT Indofood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indofood Sukses has no effect on the direction of Krakatau Steel i.e., Krakatau Steel and PT Indofood go up and down completely randomly.
Pair Corralation between Krakatau Steel and PT Indofood
Assuming the 90 days trading horizon Krakatau Steel Persero is expected to under-perform the PT Indofood. In addition to that, Krakatau Steel is 1.49 times more volatile than PT Indofood Sukses. It trades about -0.29 of its total potential returns per unit of risk. PT Indofood Sukses is currently generating about 0.1 per unit of volatility. If you would invest 730,000 in PT Indofood Sukses on September 2, 2024 and sell it today you would earn a total of 25,000 from holding PT Indofood Sukses or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krakatau Steel Persero vs. PT Indofood Sukses
Performance |
| Timeline |
| Krakatau Steel Persero |
| PT Indofood Sukses |
Krakatau Steel and PT Indofood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krakatau Steel and PT Indofood
The main advantage of trading using opposite Krakatau Steel and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krakatau Steel position performs unexpectedly, PT Indofood 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 PT Indofood will offset losses from the drop in PT Indofood's long position.| Krakatau Steel vs. Perusahaan Gas Negara | Krakatau Steel vs. Telkom Indonesia Tbk | Krakatau Steel vs. Mitra Pinasthika Mustika | Krakatau Steel vs. Jakarta Int Hotels |
| PT Indofood vs. Astra International Tbk | PT Indofood vs. Unilever Indonesia Tbk | PT Indofood vs. Telkom Indonesia Tbk | PT Indofood vs. Bank Mandiri 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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