Correlation Between Metrodata Electronics and Steel Pipe
Can any of the company-specific risk be diversified away by investing in both Metrodata Electronics and Steel Pipe 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 Metrodata Electronics and Steel Pipe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metrodata Electronics Tbk and Steel Pipe Industry, you can compare the effects of market volatilities on Metrodata Electronics and Steel Pipe 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 Metrodata Electronics with a short position of Steel Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metrodata Electronics and Steel Pipe.
Diversification Opportunities for Metrodata Electronics and Steel Pipe
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metrodata and Steel is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Metrodata Electronics Tbk and Steel Pipe Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Pipe Industry and Metrodata Electronics 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 Metrodata Electronics Tbk are associated (or correlated) with Steel Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Pipe Industry has no effect on the direction of Metrodata Electronics i.e., Metrodata Electronics and Steel Pipe go up and down completely randomly.
Pair Corralation between Metrodata Electronics and Steel Pipe
Assuming the 90 days trading horizon Metrodata Electronics Tbk is expected to generate 1.55 times more return on investment than Steel Pipe. However, Metrodata Electronics is 1.55 times more volatile than Steel Pipe Industry. It trades about 0.08 of its potential returns per unit of risk. Steel Pipe Industry is currently generating about 0.03 per unit of risk. If you would invest 53,455 in Metrodata Electronics Tbk on August 24, 2024 and sell it today you would earn a total of 10,045 from holding Metrodata Electronics Tbk or generate 18.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metrodata Electronics Tbk vs. Steel Pipe Industry
Performance |
| Timeline |
| Metrodata Electronics Tbk |
| Steel Pipe Industry |
Metrodata Electronics and Steel Pipe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metrodata Electronics and Steel Pipe
The main advantage of trading using opposite Metrodata Electronics and Steel Pipe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metrodata Electronics position performs unexpectedly, Steel Pipe 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 Steel Pipe will offset losses from the drop in Steel Pipe's long position.| Metrodata Electronics vs. Multipolar Tbk | Metrodata Electronics vs. Astra Graphia Tbk | Metrodata Electronics vs. Matahari Putra Prima | Metrodata Electronics vs. Ramayana Lestari Sentosa |
| Steel Pipe vs. Kedaung Indah Can | Steel Pipe vs. Langgeng Makmur Industri | Steel Pipe vs. Kabelindo Murni Tbk | Steel Pipe vs. Champion Pacific Indonesia |
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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