Correlation Between Aneka Tambang and Cochlear
Can any of the company-specific risk be diversified away by investing in both Aneka Tambang and Cochlear 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 Cochlear 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 Cochlear, you can compare the effects of market volatilities on Aneka Tambang and Cochlear 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 Cochlear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and Cochlear.
Diversification Opportunities for Aneka Tambang and Cochlear
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aneka and Cochlear is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Cochlear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cochlear 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 Cochlear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cochlear has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Cochlear go up and down completely randomly.
Pair Corralation between Aneka Tambang and Cochlear
Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to under-perform the Cochlear. But the stock apears to be less risky and, when comparing its historical volatility, Aneka Tambang Tbk is 1.21 times less risky than Cochlear. The stock trades about -0.28 of its potential returns per unit of risk. The Cochlear is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 29,829 in Cochlear on October 18, 2024 and sell it today you would earn a total of 866.00 from holding Cochlear or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aneka Tambang Tbk vs. Cochlear
Performance |
| Timeline |
| Aneka Tambang Tbk |
| Cochlear |
Aneka Tambang and Cochlear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aneka Tambang and Cochlear
The main advantage of trading using opposite Aneka Tambang and Cochlear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aneka Tambang position performs unexpectedly, Cochlear 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 Cochlear will offset losses from the drop in Cochlear's long position.| Aneka Tambang vs. Health and Plant | Aneka Tambang vs. Oneview Healthcare PLC | Aneka Tambang vs. BTC Health Limited | Aneka Tambang vs. Farm Pride Foods |
| Cochlear vs. Sky Metals | Cochlear vs. Centrex Metals | Cochlear vs. Australian United Investment | Cochlear vs. Stelar Metals |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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