Correlation Between Champion Pacific and Lion Metal
Can any of the company-specific risk be diversified away by investing in both Champion Pacific 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 Champion Pacific and Lion Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Pacific Indonesia and Lion Metal Works, you can compare the effects of market volatilities on Champion Pacific 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 Champion Pacific with a short position of Lion Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Pacific and Lion Metal.
Diversification Opportunities for Champion Pacific and Lion Metal
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Champion and Lion is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Champion Pacific Indonesia 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 Champion Pacific 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 Champion Pacific Indonesia 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 Champion Pacific i.e., Champion Pacific and Lion Metal go up and down completely randomly.
Pair Corralation between Champion Pacific and Lion Metal
Assuming the 90 days trading horizon Champion Pacific Indonesia is expected to generate 0.42 times more return on investment than Lion Metal. However, Champion Pacific Indonesia is 2.38 times less risky than Lion Metal. It trades about 0.03 of its potential returns per unit of risk. Lion Metal Works is currently generating about -0.17 per unit of risk. If you would invest 50,000 in Champion Pacific Indonesia on September 3, 2024 and sell it today you would earn a total of 500.00 from holding Champion Pacific Indonesia or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Pacific Indonesia vs. Lion Metal Works
Performance |
| Timeline |
| Champion Pacific Ind |
| Lion Metal Works |
Champion Pacific and Lion Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Pacific and Lion Metal
The main advantage of trading using opposite Champion Pacific and Lion Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Pacific 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.| Champion Pacific vs. Timah Persero Tbk | Champion Pacific vs. Semen Indonesia Persero | Champion Pacific vs. Mitra Pinasthika Mustika | Champion Pacific 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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