Correlation Between Aneka Tambang and Legacy Iron
Can any of the company-specific risk be diversified away by investing in both Aneka Tambang and Legacy Iron 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 Legacy Iron 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 Legacy Iron Ore, you can compare the effects of market volatilities on Aneka Tambang and Legacy Iron 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 Legacy Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and Legacy Iron.
Diversification Opportunities for Aneka Tambang and Legacy Iron
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aneka and Legacy is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Legacy Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legacy Iron Ore 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 Legacy Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legacy Iron Ore has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Legacy Iron go up and down completely randomly.
Pair Corralation between Aneka Tambang and Legacy Iron
Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to under-perform the Legacy Iron. But the stock apears to be less risky and, when comparing its historical volatility, Aneka Tambang Tbk is 3.45 times less risky than Legacy Iron. The stock trades about 0.0 of its potential returns per unit of risk. The Legacy Iron Ore is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1.80 in Legacy Iron Ore on September 3, 2024 and sell it today you would lose (0.70) from holding Legacy Iron Ore or give up 38.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aneka Tambang Tbk vs. Legacy Iron Ore
Performance |
| Timeline |
| Aneka Tambang Tbk |
| Legacy Iron Ore |
Aneka Tambang and Legacy Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aneka Tambang and Legacy Iron
The main advantage of trading using opposite Aneka Tambang and Legacy Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aneka Tambang position performs unexpectedly, Legacy Iron 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 Legacy Iron will offset losses from the drop in Legacy Iron's long position.| Aneka Tambang vs. Fisher Paykel Healthcare | Aneka Tambang vs. Capitol Health | Aneka Tambang vs. Nine Entertainment Co | Aneka Tambang vs. Lendlease Group |
| Legacy Iron vs. Northern Star Resources | Legacy Iron vs. Evolution Mining | Legacy Iron vs. Bluescope Steel | Legacy Iron vs. Aneka Tambang Tbk |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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