Correlation Between Aneka Tambang and LGI
Can any of the company-specific risk be diversified away by investing in both Aneka Tambang and LGI 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 LGI 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 LGI, you can compare the effects of market volatilities on Aneka Tambang and LGI 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 LGI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and LGI.
Diversification Opportunities for Aneka Tambang and LGI
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aneka and LGI is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and LGI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI 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 LGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LGI has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and LGI go up and down completely randomly.
Pair Corralation between Aneka Tambang and LGI
Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to under-perform the LGI. But the stock apears to be less risky and, when comparing its historical volatility, Aneka Tambang Tbk is 1.59 times less risky than LGI. The stock trades about -0.06 of its potential returns per unit of risk. The LGI is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 194.00 in LGI on October 18, 2024 and sell it today you would earn a total of 78.00 from holding LGI or generate 40.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aneka Tambang Tbk vs. LGI
Performance |
| Timeline |
| Aneka Tambang Tbk |
| LGI |
Aneka Tambang and LGI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aneka Tambang and LGI
The main advantage of trading using opposite Aneka Tambang and LGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aneka Tambang position performs unexpectedly, LGI 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 LGI will offset losses from the drop in LGI's long position.| Aneka Tambang vs. Carlton Investments | Aneka Tambang vs. Argo Investments | Aneka Tambang vs. Readytech Holdings | Aneka Tambang vs. MFF Capital Investments |
| LGI vs. Aneka Tambang Tbk | LGI vs. Commonwealth Bank | LGI vs. Commonwealth Bank of | LGI vs. Australia and New |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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