Correlation Between Bank Ocbc and Krakatau Steel
Can any of the company-specific risk be diversified away by investing in both Bank Ocbc 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 Bank Ocbc and Krakatau Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Ocbc Nisp and Krakatau Steel Persero, you can compare the effects of market volatilities on Bank Ocbc 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 Bank Ocbc with a short position of Krakatau Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Ocbc and Krakatau Steel.
Diversification Opportunities for Bank Ocbc and Krakatau Steel
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Krakatau is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bank Ocbc Nisp 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 Bank Ocbc 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 Bank Ocbc Nisp 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 Bank Ocbc i.e., Bank Ocbc and Krakatau Steel go up and down completely randomly.
Pair Corralation between Bank Ocbc and Krakatau Steel
Assuming the 90 days trading horizon Bank Ocbc Nisp is expected to generate 0.4 times more return on investment than Krakatau Steel. However, Bank Ocbc Nisp is 2.51 times less risky than Krakatau Steel. It trades about 0.05 of its potential returns per unit of risk. Krakatau Steel Persero is currently generating about -0.01 per unit of risk. If you would invest 115,425 in Bank Ocbc Nisp on August 27, 2024 and sell it today you would earn a total of 18,575 from holding Bank Ocbc Nisp or generate 16.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Ocbc Nisp vs. Krakatau Steel Persero
Performance |
| Timeline |
| Bank Ocbc Nisp |
| Krakatau Steel Persero |
Bank Ocbc and Krakatau Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Ocbc and Krakatau Steel
The main advantage of trading using opposite Bank Ocbc and Krakatau Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Ocbc 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.| Bank Ocbc vs. Bank Mega Tbk | Bank Ocbc vs. Bank Pan Indonesia | Bank Ocbc vs. Bank Permata Tbk | Bank Ocbc vs. Bank Cimb Niaga |
| Krakatau Steel vs. Kedaung Indah Can | Krakatau Steel vs. Langgeng Makmur Industri | Krakatau Steel vs. Kabelindo Murni Tbk | Krakatau Steel vs. Mustika Ratu 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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