Correlation Between Aneka Tambang and Hammer Metals
Can any of the company-specific risk be diversified away by investing in both Aneka Tambang and Hammer Metals 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 Hammer Metals 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 Hammer Metals, you can compare the effects of market volatilities on Aneka Tambang and Hammer Metals 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 Hammer Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and Hammer Metals.
Diversification Opportunities for Aneka Tambang and Hammer Metals
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aneka and Hammer is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Hammer Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammer Metals 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 Hammer Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammer Metals has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Hammer Metals go up and down completely randomly.
Pair Corralation between Aneka Tambang and Hammer Metals
Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to under-perform the Hammer Metals. But the stock apears to be less risky and, when comparing its historical volatility, Aneka Tambang Tbk is 5.12 times less risky than Hammer Metals. The stock trades about -0.28 of its potential returns per unit of risk. The Hammer Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3.10 in Hammer Metals on October 20, 2024 and sell it today you would earn a total of 0.20 from holding Hammer Metals or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aneka Tambang Tbk vs. Hammer Metals
Performance |
| Timeline |
| Aneka Tambang Tbk |
| Hammer Metals |
Aneka Tambang and Hammer Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aneka Tambang and Hammer Metals
The main advantage of trading using opposite Aneka Tambang and Hammer Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aneka Tambang position performs unexpectedly, Hammer Metals 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 Hammer Metals will offset losses from the drop in Hammer Metals' long position.| Aneka Tambang vs. Hammer Metals | Aneka Tambang vs. Aspire Mining | Aneka Tambang vs. Dalaroo Metals | Aneka Tambang vs. Black Rock Mining |
| Hammer Metals vs. Ainsworth Game Technology | Hammer Metals vs. Autosports Group | Hammer Metals vs. Computershare | Hammer Metals vs. oOhMedia |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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