Correlation Between KRAKATAU STEEL and TITANIUM TRANSPORTGROUP

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

Diversification Opportunities for KRAKATAU STEEL and TITANIUM TRANSPORTGROUP

0.43

Correlation Coefficient

KRAKATAU STEEL  TITANIUM TRANSPORTGROUP

Very weak diversification

The 3 months correlation between KRAKATAU and TITANIUM is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding KRAKATAU STEEL B and TITANIUM TRANSPORTGROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TITANIUM TRANSPORTGROUP 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 TITANIUM TRANSPORTGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TITANIUM TRANSPORTGROUP has no effect on the direction of KRAKATAU STEEL i.e., KRAKATAU STEEL and TITANIUM TRANSPORTGROUP go up and down completely randomly.

Pair Corralation between KRAKATAU STEEL and TITANIUM TRANSPORTGROUP

Assuming the 90 days trading horizon KRAKATAU STEEL B is expected to generate 2.02 times more return on investment than TITANIUM TRANSPORTGROUP. However, KRAKATAU STEEL is 2.02 times more volatile than TITANIUM TRANSPORTGROUP. It trades about 0.15 of its potential returns per unit of risk. TITANIUM TRANSPORTGROUP is currently generating about 0.08 per unit of risk. If you would invest  0.40  in KRAKATAU STEEL B on September 23, 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

KRAKATAU STEEL B   vs.  TITANIUM TRANSPORTGROUP

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 uncertain forward-looking signals, KRAKATAU STEEL unveiled solid returns over the last few months and may actually be approaching a breakup point.

TITANIUM TRANSPORTGROUP

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TITANIUM TRANSPORTGROUP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TITANIUM TRANSPORTGROUP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with KRAKATAU STEEL and TITANIUM TRANSPORTGROUP

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

The idea behind KRAKATAU STEEL B and TITANIUM TRANSPORTGROUP 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.