Correlation Between PT Boston and Steel Pipe
Can any of the company-specific risk be diversified away by investing in both PT Boston 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 PT Boston and Steel Pipe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Boston Furniture and Steel Pipe Industry, you can compare the effects of market volatilities on PT Boston 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 PT Boston with a short position of Steel Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Boston and Steel Pipe.
Diversification Opportunities for PT Boston and Steel Pipe
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between SOFA and Steel is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding PT Boston Furniture 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 PT Boston 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 Boston Furniture 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 PT Boston i.e., PT Boston and Steel Pipe go up and down completely randomly.
Pair Corralation between PT Boston and Steel Pipe
Assuming the 90 days trading horizon PT Boston Furniture is expected to under-perform the Steel Pipe. In addition to that, PT Boston is 1.58 times more volatile than Steel Pipe Industry. It trades about -0.39 of its total potential returns per unit of risk. Steel Pipe Industry is currently generating about 0.11 per unit of volatility. If you would invest 24,600 in Steel Pipe Industry on January 12, 2025 and sell it today you would earn a total of 1,400 from holding Steel Pipe Industry or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.75% |
| Values | Daily Returns |
PT Boston Furniture vs. Steel Pipe Industry
Performance |
| Timeline |
| PT Boston Furniture |
| Steel Pipe Industry |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
PT Boston and Steel Pipe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Boston and Steel Pipe
The main advantage of trading using opposite PT Boston and Steel Pipe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Boston 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.| PT Boston vs. PT Hetzer Medical | PT Boston vs. Bangun Karya Perkasa | PT Boston vs. PT Sari Kreasi | PT Boston vs. PT Dewi Shri |
| Steel Pipe vs. Intanwijaya Internasional Tbk | Steel Pipe vs. Betonjaya Manunggal Tbk | Steel Pipe vs. Asiaplast Industries Tbk | Steel Pipe vs. Argha Karya Prima |
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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