Correlation Between Aneka Tambang and Lake Resources
Can any of the company-specific risk be diversified away by investing in both Aneka Tambang and Lake Resources 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 Lake Resources 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 Lake Resources NL, you can compare the effects of market volatilities on Aneka Tambang and Lake Resources 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 Lake Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and Lake Resources.
Diversification Opportunities for Aneka Tambang and Lake Resources
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aneka and Lake is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Lake Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Resources NL 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 Lake Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Resources NL has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Lake Resources go up and down completely randomly.
Pair Corralation between Aneka Tambang and Lake Resources
Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to generate 0.98 times more return on investment than Lake Resources. However, Aneka Tambang Tbk is 1.02 times less risky than Lake Resources. It trades about -0.01 of its potential returns per unit of risk. Lake Resources NL is currently generating about -0.59 per unit of risk. If you would invest 91.00 in Aneka Tambang Tbk on August 31, 2024 and sell it today you would lose (1.00) from holding Aneka Tambang Tbk or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aneka Tambang Tbk vs. Lake Resources NL
Performance |
| Timeline |
| Aneka Tambang Tbk |
| Lake Resources NL |
Aneka Tambang and Lake Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aneka Tambang and Lake Resources
The main advantage of trading using opposite Aneka Tambang and Lake Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aneka Tambang position performs unexpectedly, Lake Resources 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 Lake Resources will offset losses from the drop in Lake Resources' long position.| Aneka Tambang vs. American West Metals | Aneka Tambang vs. Super Retail Group | Aneka Tambang vs. Computershare | Aneka Tambang vs. Alto Metals |
| Lake Resources vs. Northern Star Resources | Lake Resources vs. Evolution Mining | Lake Resources vs. Bluescope Steel | Lake Resources vs. De Grey Mining |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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