Correlation Between Krakatau Steel and Sona Topas
Can any of the company-specific risk be diversified away by investing in both Krakatau Steel and Sona Topas 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 Sona Topas 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 Sona Topas Tourism, you can compare the effects of market volatilities on Krakatau Steel and Sona Topas 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 Sona Topas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krakatau Steel and Sona Topas.
Diversification Opportunities for Krakatau Steel and Sona Topas
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Krakatau and Sona is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Krakatau Steel Persero and Sona Topas Tourism in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sona Topas Tourism 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 Sona Topas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sona Topas Tourism has no effect on the direction of Krakatau Steel i.e., Krakatau Steel and Sona Topas go up and down completely randomly.
Pair Corralation between Krakatau Steel and Sona Topas
Assuming the 90 days trading horizon Krakatau Steel Persero is expected to under-perform the Sona Topas. But the stock apears to be less risky and, when comparing its historical volatility, Krakatau Steel Persero is 2.83 times less risky than Sona Topas. The stock trades about -0.22 of its potential returns per unit of risk. The Sona Topas Tourism is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 435,000 in Sona Topas Tourism on September 3, 2024 and sell it today you would earn a total of 232,500 from holding Sona Topas Tourism or generate 53.45% 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. Sona Topas Tourism
Performance |
| Timeline |
| Krakatau Steel Persero |
| Sona Topas Tourism |
Krakatau Steel and Sona Topas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krakatau Steel and Sona Topas
The main advantage of trading using opposite Krakatau Steel and Sona Topas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krakatau Steel position performs unexpectedly, Sona Topas 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 Sona Topas will offset losses from the drop in Sona Topas' 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 |
| Sona Topas vs. Communication Cable Systems | Sona Topas vs. Krakatau Steel Persero | Sona Topas vs. Inocycle Technology Tbk | Sona Topas vs. Ciptadana Asset Management |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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