Correlation Between Krakatau Steel and Ciptadana Asset
Can any of the company-specific risk be diversified away by investing in both Krakatau Steel and Ciptadana Asset 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 Ciptadana Asset 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 Ciptadana Asset Management, you can compare the effects of market volatilities on Krakatau Steel and Ciptadana Asset 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 Ciptadana Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krakatau Steel and Ciptadana Asset.
Diversification Opportunities for Krakatau Steel and Ciptadana Asset
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Krakatau and Ciptadana is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Krakatau Steel Persero and Ciptadana Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciptadana Asset Mana 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 Ciptadana Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciptadana Asset Mana has no effect on the direction of Krakatau Steel i.e., Krakatau Steel and Ciptadana Asset go up and down completely randomly.
Pair Corralation between Krakatau Steel and Ciptadana Asset
Assuming the 90 days trading horizon Krakatau Steel Persero is expected to under-perform the Ciptadana Asset. But the stock apears to be less risky and, when comparing its historical volatility, Krakatau Steel Persero is 1.41 times less risky than Ciptadana Asset. The stock trades about -0.01 of its potential returns per unit of risk. The Ciptadana Asset Management is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6,049 in Ciptadana Asset Management on August 27, 2024 and sell it today you would lose (249.00) from holding Ciptadana Asset Management or give up 4.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.15% |
| Values | Daily Returns |
Krakatau Steel Persero vs. Ciptadana Asset Management
Performance |
| Timeline |
| Krakatau Steel Persero |
| Ciptadana Asset Mana |
Krakatau Steel and Ciptadana Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krakatau Steel and Ciptadana Asset
The main advantage of trading using opposite Krakatau Steel and Ciptadana Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krakatau Steel position performs unexpectedly, Ciptadana Asset 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 Ciptadana Asset will offset losses from the drop in Ciptadana Asset'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 |
| Ciptadana Asset vs. Bank Central Asia | Ciptadana Asset vs. Bank Rakyat Indonesia | Ciptadana Asset vs. Bayan Resources Tbk | Ciptadana Asset 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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