Correlation Between KRAKATAU STEEL and ALEFARM BREWING

Can any of the company-specific risk be diversified away by investing in both KRAKATAU STEEL and ALEFARM BREWING 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 KRAKATAU STEEL and ALEFARM BREWING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KRAKATAU STEEL B and ALEFARM BREWING DK 05, you can compare the effects of market volatilities on KRAKATAU STEEL and ALEFARM BREWING 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 KRAKATAU STEEL with a short position of ALEFARM BREWING. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRAKATAU STEEL and ALEFARM BREWING.

Diversification Opportunities for KRAKATAU STEEL and ALEFARM BREWING

-0.15

Correlation Coefficient

KRAKATAU STEEL  ALEFARM BREWING

Good diversification

The 3 months correlation between KRAKATAU and ALEFARM is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding KRAKATAU STEEL B and ALEFARM BREWING DK 05 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALEFARM BREWING DK and KRAKATAU 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 KRAKATAU STEEL B are associated (or correlated) with ALEFARM BREWING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALEFARM BREWING DK has no effect on the direction of KRAKATAU STEEL i.e., KRAKATAU STEEL and ALEFARM BREWING go up and down completely randomly.

Pair Corralation between KRAKATAU STEEL and ALEFARM BREWING

If you would invest  0.60  in KRAKATAU STEEL B on September 27, 2024 and sell it today you would earn a total of  0.00  from holding KRAKATAU STEEL B or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

KRAKATAU STEEL B   vs.  ALEFARM BREWING DK 05

KRAKATAU STEEL B

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KRAKATAU STEEL B are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, KRAKATAU STEEL unveiled solid returns over the last few months and may actually be approaching a breakup point.

ALEFARM BREWING DK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALEFARM BREWING DK 05 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with KRAKATAU STEEL and ALEFARM BREWING

The main advantage of trading using opposite KRAKATAU STEEL and ALEFARM BREWING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRAKATAU STEEL position performs unexpectedly, ALEFARM BREWING 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 ALEFARM BREWING will offset losses from the drop in ALEFARM BREWING's long position.

The idea behind KRAKATAU STEEL B and ALEFARM BREWING DK 05 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.