Correlation Between PT Steel and KOBE STEEL
Can any of the company-specific risk be diversified away by investing in both PT Steel and KOBE 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 PT Steel and KOBE STEEL 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 KOBE STEEL LTD, you can compare the effects of market volatilities on PT Steel and KOBE 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 PT Steel with a short position of KOBE STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Steel and KOBE STEEL.
Diversification Opportunities for PT Steel and KOBE STEEL
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between S08 and KOBE is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding PT Steel Pipe and KOBE STEEL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOBE STEEL LTD 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 KOBE STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOBE STEEL LTD has no effect on the direction of PT Steel i.e., PT Steel and KOBE STEEL go up and down completely randomly.
Pair Corralation between PT Steel and KOBE STEEL
Assuming the 90 days horizon PT Steel Pipe is expected to generate 4.98 times more return on investment than KOBE STEEL. However, PT Steel is 4.98 times more volatile than KOBE STEEL LTD. It trades about 0.07 of its potential returns per unit of risk. KOBE STEEL LTD is currently generating about 0.27 per unit of risk. If you would invest 1.10 in PT Steel Pipe on October 20, 2024 and sell it today you would earn a total of 0.05 from holding PT Steel Pipe or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Steel Pipe vs. KOBE STEEL LTD
Performance |
| Timeline |
| PT Steel Pipe |
| KOBE STEEL LTD |
PT Steel and KOBE STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Steel and KOBE STEEL
The main advantage of trading using opposite PT Steel and KOBE STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Steel position performs unexpectedly, KOBE 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 KOBE STEEL will offset losses from the drop in KOBE STEEL's long position.| PT Steel vs. ON SEMICONDUCTOR | PT Steel vs. National Beverage Corp | PT Steel vs. INTER CARS SA | PT Steel vs. Fevertree Drinks PLC |
| KOBE STEEL vs. DEVRY EDUCATION GRP | KOBE STEEL vs. CarsalesCom | KOBE STEEL vs. SIDETRADE EO 1 | KOBE STEEL vs. FLOW TRADERS LTD |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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