Correlation Between Indosterling Technomedia and Krakatau Steel
Can any of the company-specific risk be diversified away by investing in both Indosterling Technomedia 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 Indosterling Technomedia and Krakatau Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indosterling Technomedia Tbk and Krakatau Steel Persero, you can compare the effects of market volatilities on Indosterling Technomedia 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 Indosterling Technomedia with a short position of Krakatau Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indosterling Technomedia and Krakatau Steel.
Diversification Opportunities for Indosterling Technomedia and Krakatau Steel
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Indosterling and Krakatau is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Indosterling Technomedia Tbk 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 Indosterling Technomedia 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 Indosterling Technomedia Tbk 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 Indosterling Technomedia i.e., Indosterling Technomedia and Krakatau Steel go up and down completely randomly.
Pair Corralation between Indosterling Technomedia and Krakatau Steel
Assuming the 90 days trading horizon Indosterling Technomedia Tbk is expected to under-perform the Krakatau Steel. But the stock apears to be less risky and, when comparing its historical volatility, Indosterling Technomedia Tbk is 1.01 times less risky than Krakatau Steel. The stock trades about -0.32 of its potential returns per unit of risk. The Krakatau Steel Persero is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 34,600 in Krakatau Steel Persero on August 26, 2024 and sell it today you would lose (22,600) from holding Krakatau Steel Persero or give up 65.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.58% |
| Values | Daily Returns |
Indosterling Technomedia Tbk vs. Krakatau Steel Persero
Performance |
| Timeline |
| Indosterling Technomedia |
| Krakatau Steel Persero |
Indosterling Technomedia and Krakatau Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indosterling Technomedia and Krakatau Steel
The main advantage of trading using opposite Indosterling Technomedia and Krakatau Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indosterling Technomedia 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.| Indosterling Technomedia vs. Multipolar Technology Tbk | Indosterling Technomedia vs. Digital Mediatama Maxima | Indosterling Technomedia vs. M Cash Integrasi | Indosterling Technomedia vs. NFC Indonesia PT |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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