Correlation Between Aneka Tambang and Challenger
Can any of the company-specific risk be diversified away by investing in both Aneka Tambang and Challenger 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 Aneka Tambang and Challenger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aneka Tambang Tbk and Challenger, you can compare the effects of market volatilities on Aneka Tambang and Challenger 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 Aneka Tambang with a short position of Challenger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and Challenger.
Diversification Opportunities for Aneka Tambang and Challenger
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aneka and Challenger is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Challenger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Challenger and Aneka Tambang 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 Aneka Tambang Tbk are associated (or correlated) with Challenger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Challenger has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Challenger go up and down completely randomly.
Pair Corralation between Aneka Tambang and Challenger
Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to under-perform the Challenger. In addition to that, Aneka Tambang is 1.89 times more volatile than Challenger. It trades about -0.01 of its total potential returns per unit of risk. Challenger is currently generating about 0.07 per unit of volatility. If you would invest 606.00 in Challenger on August 31, 2024 and sell it today you would earn a total of 11.00 from holding Challenger or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Aneka Tambang Tbk vs. Challenger
Performance |
| Timeline |
| Aneka Tambang Tbk |
| Challenger |
Aneka Tambang and Challenger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aneka Tambang and Challenger
The main advantage of trading using opposite Aneka Tambang and Challenger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aneka Tambang position performs unexpectedly, Challenger 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 Challenger will offset losses from the drop in Challenger's long position.| Aneka Tambang vs. American West Metals | Aneka Tambang vs. Super Retail Group | Aneka Tambang vs. Computershare | Aneka Tambang vs. Alto Metals |
| Challenger vs. Thorney Technologies | Challenger vs. Land Homes Group | Challenger vs. Hansen Technologies | Challenger vs. Neurotech International |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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