Correlation Between Krakatau Steel and PT Boston
Can any of the company-specific risk be diversified away by investing in both Krakatau Steel and PT Boston 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 Boston 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 Boston Furniture, you can compare the effects of market volatilities on Krakatau Steel and PT Boston 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 Boston. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krakatau Steel and PT Boston.
Diversification Opportunities for Krakatau Steel and PT Boston
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Krakatau and SOFA is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Krakatau Steel Persero and PT Boston Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Boston Furniture 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 Boston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Boston Furniture has no effect on the direction of Krakatau Steel i.e., Krakatau Steel and PT Boston go up and down completely randomly.
Pair Corralation between Krakatau Steel and PT Boston
Assuming the 90 days trading horizon Krakatau Steel Persero is expected to under-perform the PT Boston. But the stock apears to be less risky and, when comparing its historical volatility, Krakatau Steel Persero is 1.67 times less risky than PT Boston. The stock trades about -0.28 of its potential returns per unit of risk. The PT Boston Furniture is currently generating about 0.75 of returns per unit of risk over similar time horizon. If you would invest 1,900 in PT Boston Furniture on September 4, 2024 and sell it today you would earn a total of 1,800 from holding PT Boston Furniture or generate 94.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krakatau Steel Persero vs. PT Boston Furniture
Performance |
| Timeline |
| Krakatau Steel Persero |
| PT Boston Furniture |
Krakatau Steel and PT Boston Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krakatau Steel and PT Boston
The main advantage of trading using opposite Krakatau Steel and PT Boston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krakatau Steel position performs unexpectedly, PT Boston 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 Boston will offset losses from the drop in PT Boston's long position.| Krakatau Steel vs. Timah Persero Tbk | Krakatau Steel vs. Semen Indonesia Persero | Krakatau Steel vs. Mitra Pinasthika Mustika | Krakatau Steel vs. Jakarta Int Hotels |
| PT Boston vs. Mitra Pinasthika Mustika | PT Boston vs. Jakarta Int Hotels | PT Boston vs. Indosat Tbk | PT Boston vs. Inocycle Technology 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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