Correlation Between KRAKATAU STEEL and Brockhaus Capital

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

Diversification Opportunities for KRAKATAU STEEL and Brockhaus Capital

-0.35

Correlation Coefficient

KRAKATAU STEEL  Brockhaus Capital

Very good diversification

The 3 months correlation between KRAKATAU and Brockhaus is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding KRAKATAU STEEL B and Brockhaus Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brockhaus Capital 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 Brockhaus Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brockhaus Capital has no effect on the direction of KRAKATAU STEEL i.e., KRAKATAU STEEL and Brockhaus Capital go up and down completely randomly.

Pair Corralation between KRAKATAU STEEL and Brockhaus Capital

Assuming the 90 days trading horizon KRAKATAU STEEL B is expected to generate 1.99 times more return on investment than Brockhaus Capital. However, KRAKATAU STEEL is 1.99 times more volatile than Brockhaus Capital Management. It trades about 0.15 of its potential returns per unit of risk. Brockhaus Capital Management is currently generating about -0.06 per unit of risk. If you would invest  0.40  in KRAKATAU STEEL B on September 25, 2024 and sell it today you would earn a total of  0.20  from holding KRAKATAU STEEL B or generate 50.0% 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.  Brockhaus Capital Management

KRAKATAU STEEL B

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KRAKATAU STEEL B are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking signals, KRAKATAU STEEL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Brockhaus Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical 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 Brockhaus Capital

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

The idea behind KRAKATAU STEEL B and Brockhaus Capital Management 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.