Correlation Between Aneka Tambang and Patriot Battery
Can any of the company-specific risk be diversified away by investing in both Aneka Tambang and Patriot Battery 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 Patriot Battery 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 Patriot Battery Metals, you can compare the effects of market volatilities on Aneka Tambang and Patriot Battery 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 Patriot Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and Patriot Battery.
Diversification Opportunities for Aneka Tambang and Patriot Battery
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aneka and Patriot is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Patriot Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot Battery 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 Patriot Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot Battery Metals has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Patriot Battery go up and down completely randomly.
Pair Corralation between Aneka Tambang and Patriot Battery
Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to generate 0.5 times more return on investment than Patriot Battery. However, Aneka Tambang Tbk is 2.01 times less risky than Patriot Battery. It trades about -0.1 of its potential returns per unit of risk. Patriot Battery Metals is currently generating about -0.42 per unit of risk. If you would invest 91.00 in Aneka Tambang Tbk on August 29, 2024 and sell it today you would lose (5.00) from holding Aneka Tambang Tbk or give up 5.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aneka Tambang Tbk vs. Patriot Battery Metals
Performance |
| Timeline |
| Aneka Tambang Tbk |
| Patriot Battery Metals |
Aneka Tambang and Patriot Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aneka Tambang and Patriot Battery
The main advantage of trading using opposite Aneka Tambang and Patriot Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aneka Tambang position performs unexpectedly, Patriot Battery 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 Patriot Battery will offset losses from the drop in Patriot Battery's long position.| Aneka Tambang vs. Hawsons Iron | Aneka Tambang vs. Carlton Investments | Aneka Tambang vs. MFF Capital Investments | Aneka Tambang vs. Mount Gibson Iron |
| Patriot Battery vs. Retail Food Group | Patriot Battery vs. Janison Education Group | Patriot Battery vs. Charter Hall Education | Patriot Battery vs. Australian Unity Office |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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