Correlation Between Mustika Ratu and Krakatau Steel
Can any of the company-specific risk be diversified away by investing in both Mustika Ratu and Krakatau Steel 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 Mustika Ratu and Krakatau Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mustika Ratu Tbk and Krakatau Steel Persero, you can compare the effects of market volatilities on Mustika Ratu and Krakatau Steel 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 Mustika Ratu with a short position of Krakatau Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mustika Ratu and Krakatau Steel.
Diversification Opportunities for Mustika Ratu and Krakatau Steel
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mustika and Krakatau is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Mustika Ratu Tbk and Krakatau Steel Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krakatau Steel Persero and Mustika Ratu 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 Mustika Ratu Tbk are associated (or correlated) with Krakatau Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krakatau Steel Persero has no effect on the direction of Mustika Ratu i.e., Mustika Ratu and Krakatau Steel go up and down completely randomly.
Pair Corralation between Mustika Ratu and Krakatau Steel
Assuming the 90 days trading horizon Mustika Ratu Tbk is expected to generate 0.81 times more return on investment than Krakatau Steel. However, Mustika Ratu Tbk is 1.24 times less risky than Krakatau Steel. It trades about -0.26 of its potential returns per unit of risk. Krakatau Steel Persero is currently generating about -0.3 per unit of risk. If you would invest 37,400 in Mustika Ratu Tbk on August 29, 2024 and sell it today you would lose (5,000) from holding Mustika Ratu Tbk or give up 13.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mustika Ratu Tbk vs. Krakatau Steel Persero
Performance |
| Timeline |
| Mustika Ratu Tbk |
| Krakatau Steel Persero |
Mustika Ratu and Krakatau Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mustika Ratu and Krakatau Steel
The main advantage of trading using opposite Mustika Ratu and Krakatau Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mustika Ratu position performs unexpectedly, Krakatau Steel 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 Krakatau Steel will offset losses from the drop in Krakatau Steel's long position.| Mustika Ratu vs. Bakrieland Development Tbk | Mustika Ratu vs. Bakrie Brothers Tbk | Mustika Ratu vs. Energi Mega Persada | Mustika Ratu vs. Sampoerna Agro Tbk |
| Krakatau Steel vs. Timah Persero Tbk | Krakatau Steel vs. Garuda Indonesia Persero | Krakatau Steel vs. Jasa Marga Tbk | Krakatau Steel vs. Semen Indonesia 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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