Correlation Between Krakatau Steel and Fortune Mate

Can any of the company-specific risk be diversified away by investing in both Krakatau Steel and Fortune Mate 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 Fortune Mate into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Krakatau Steel Persero and Fortune Mate Indonesia, you can compare the effects of market volatilities on Krakatau Steel and Fortune Mate 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 Fortune Mate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krakatau Steel and Fortune Mate.

Diversification Opportunities for Krakatau Steel and Fortune Mate

-0.9

Correlation Coefficient

Krakatau Steel  Fortune Mate

Pay attention - limited upside

The 3 months correlation between Krakatau and Fortune is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Krakatau Steel Persero and Fortune Mate Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Mate Indonesia 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 Persero are associated (or correlated) with Fortune Mate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Mate Indonesia has no effect on the direction of Krakatau Steel i.e., Krakatau Steel and Fortune Mate go up and down completely randomly.

Pair Corralation between Krakatau Steel and Fortune Mate

If you would invest  54,500  in Fortune Mate Indonesia on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Fortune Mate Indonesia or generate 0.0% return on investment over 90 days.

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

Krakatau Steel Persero  vs.  Fortune Mate Indonesia

Krakatau Steel Persero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Krakatau Steel Persero has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Fortune Mate Indonesia

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fortune Mate Indonesia are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Fortune Mate disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Krakatau Steel and Fortune Mate

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

The idea behind Krakatau Steel Persero and Fortune Mate Indonesia 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.