Correlation Between PT Steel and Khiron Life

Can any of the company-specific risk be diversified away by investing in both PT Steel and Khiron Life 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 Khiron Life 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 Khiron Life Sciences, you can compare the effects of market volatilities on PT Steel and Khiron Life 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 Khiron Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Steel and Khiron Life.

Diversification Opportunities for PT Steel and Khiron Life

0.0

Correlation Coefficient

PT Steel  Khiron Life

Pay attention - limited upside

The 3 months correlation between S08 and Khiron is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PT Steel Pipe and Khiron Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khiron Life Sciences 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 Khiron Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khiron Life Sciences has no effect on the direction of PT Steel i.e., PT Steel and Khiron Life go up and down completely randomly.

Pair Corralation between PT Steel and Khiron Life

Assuming the 90 days horizon PT Steel Pipe is expected to generate 2.02 times more return on investment than Khiron Life. However, PT Steel is 2.02 times more volatile than Khiron Life Sciences. It trades about 0.03 of its potential returns per unit of risk. Khiron Life Sciences is currently generating about -0.07 per unit of risk. If you would invest  1.25  in PT Steel Pipe on October 26, 2024 and sell it today you would lose (0.10) from holding PT Steel Pipe or give up 8.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

PT Steel Pipe  vs.  Khiron Life Sciences

PT Steel Pipe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Steel Pipe has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

Khiron Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Khiron Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Khiron Life is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PT Steel and Khiron Life

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

The idea behind PT Steel Pipe and Khiron Life Sciences 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.