Correlation Between PT Steel and MISUMI GROUP

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

Diversification Opportunities for PT Steel and MISUMI GROUP

0.53

Correlation Coefficient

PT Steel  MISUMI GROUP

Very weak diversification

The 3 months correlation between S08 and MISUMI is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding PT Steel Pipe and MISUMI GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MISUMI GROUP INC 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 MISUMI GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MISUMI GROUP INC has no effect on the direction of PT Steel i.e., PT Steel and MISUMI GROUP go up and down completely randomly.

Pair Corralation between PT Steel and MISUMI GROUP

Assuming the 90 days horizon PT Steel Pipe is expected to generate 1.18 times more return on investment than MISUMI GROUP. However, PT Steel is 1.18 times more volatile than MISUMI GROUP INC. It trades about 0.03 of its potential returns per unit of risk. MISUMI GROUP INC is currently generating about 0.03 per unit of risk. If you would invest  1.15  in PT Steel Pipe on October 24, 2024 and sell it today you would earn a total of  0.00  from holding PT Steel Pipe or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

PT Steel Pipe  vs.  MISUMI GROUP INC

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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

MISUMI GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MISUMI GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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 PT Steel and MISUMI GROUP

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

The idea behind PT Steel Pipe and MISUMI GROUP INC 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.