Correlation Between Smartfren Telecom and Lion Metal
Can any of the company-specific risk be diversified away by investing in both Smartfren Telecom and Lion Metal 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 Smartfren Telecom and Lion Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smartfren Telecom Tbk and Lion Metal Works, you can compare the effects of market volatilities on Smartfren Telecom and Lion Metal 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 Smartfren Telecom with a short position of Lion Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smartfren Telecom and Lion Metal.
Diversification Opportunities for Smartfren Telecom and Lion Metal
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smartfren and Lion is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Smartfren Telecom Tbk and Lion Metal Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Metal Works and Smartfren Telecom 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 Smartfren Telecom Tbk are associated (or correlated) with Lion Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Metal Works has no effect on the direction of Smartfren Telecom i.e., Smartfren Telecom and Lion Metal go up and down completely randomly.
Pair Corralation between Smartfren Telecom and Lion Metal
Assuming the 90 days trading horizon Smartfren Telecom Tbk is expected to generate 1.13 times more return on investment than Lion Metal. However, Smartfren Telecom is 1.13 times more volatile than Lion Metal Works. It trades about -0.06 of its potential returns per unit of risk. Lion Metal Works is currently generating about -0.14 per unit of risk. If you would invest 3,000 in Smartfren Telecom Tbk on September 3, 2024 and sell it today you would lose (500.00) from holding Smartfren Telecom Tbk or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smartfren Telecom Tbk vs. Lion Metal Works
Performance |
| Timeline |
| Smartfren Telecom Tbk |
| Lion Metal Works |
Smartfren Telecom and Lion Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smartfren Telecom and Lion Metal
The main advantage of trading using opposite Smartfren Telecom and Lion Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smartfren Telecom position performs unexpectedly, Lion Metal 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 Lion Metal will offset losses from the drop in Lion Metal's long position.| Smartfren Telecom vs. Indosat Tbk | Smartfren Telecom vs. Energi Mega Persada | Smartfren Telecom vs. Mitra Pinasthika Mustika | Smartfren Telecom vs. Jakarta Int Hotels |
| Lion Metal vs. Intanwijaya Internasional Tbk | Lion Metal vs. Champion Pacific Indonesia | Lion Metal vs. Mitra Pinasthika Mustika | Lion Metal vs. Jakarta Int Hotels |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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