Correlation Between PT Steel and Traton SE

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

Diversification Opportunities for PT Steel and Traton SE

-0.14

Correlation Coefficient

PT Steel  Traton SE

Good diversification

The 3 months correlation between S08 and Traton is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding PT Steel Pipe and Traton SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Traton SE 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 Traton SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Traton SE has no effect on the direction of PT Steel i.e., PT Steel and Traton SE go up and down completely randomly.

Pair Corralation between PT Steel and Traton SE

Assuming the 90 days horizon PT Steel is expected to generate 4.38 times less return on investment than Traton SE. In addition to that, PT Steel is 1.59 times more volatile than Traton SE. It trades about 0.02 of its total potential returns per unit of risk. Traton SE is currently generating about 0.15 per unit of volatility. If you would invest  2,705  in Traton SE on December 20, 2024 and sell it today you would earn a total of  645.00  from holding Traton SE or generate 23.84% return on investment over 90 days.

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

PT Steel Pipe  vs.  Traton SE

PT Steel Pipe

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Steel Pipe are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PT Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Traton SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Traton SE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Traton SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Steel and Traton SE

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

The idea behind PT Steel Pipe and Traton SE 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.