Correlation Between PT Steel and National Beverage
Can any of the company-specific risk be diversified away by investing in both PT Steel and National Beverage 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 PT Steel and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Steel Pipe and National Beverage Corp, you can compare the effects of market volatilities on PT Steel and National Beverage 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 PT Steel with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Steel and National Beverage.
Diversification Opportunities for PT Steel and National Beverage
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between S08 and National is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding PT Steel Pipe and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp and PT 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 PT Steel Pipe are associated (or correlated) with National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of PT Steel i.e., PT Steel and National Beverage go up and down completely randomly.
Pair Corralation between PT Steel and National Beverage
Assuming the 90 days horizon PT Steel Pipe is expected to generate 2.75 times more return on investment than National Beverage. However, PT Steel is 2.75 times more volatile than National Beverage Corp. It trades about 0.01 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.05 per unit of risk. If you would invest 1.20 in PT Steel Pipe on October 25, 2024 and sell it today you would lose (0.05) from holding PT Steel Pipe or give up 4.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Steel Pipe vs. National Beverage Corp
Performance |
| Timeline |
| PT Steel Pipe |
| National Beverage Corp |
PT Steel and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Steel and National Beverage
The main advantage of trading using opposite PT Steel and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Steel position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| PT Steel vs. Citic Telecom International | PT Steel vs. Singapore Telecommunications Limited | PT Steel vs. Charter Communications | PT Steel vs. Chengdu PUTIAN Telecommunications |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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