Correlation Between Indal Aluminium and Lionmesh Prima
Can any of the company-specific risk be diversified away by investing in both Indal Aluminium and Lionmesh Prima 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 Indal Aluminium and Lionmesh Prima into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indal Aluminium Industry and Lionmesh Prima Tbk, you can compare the effects of market volatilities on Indal Aluminium and Lionmesh Prima 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 Indal Aluminium with a short position of Lionmesh Prima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indal Aluminium and Lionmesh Prima.
Diversification Opportunities for Indal Aluminium and Lionmesh Prima
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Indal and Lionmesh is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Indal Aluminium Industry and Lionmesh Prima Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lionmesh Prima Tbk and Indal Aluminium 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 Indal Aluminium Industry are associated (or correlated) with Lionmesh Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lionmesh Prima Tbk has no effect on the direction of Indal Aluminium i.e., Indal Aluminium and Lionmesh Prima go up and down completely randomly.
Pair Corralation between Indal Aluminium and Lionmesh Prima
Assuming the 90 days trading horizon Indal Aluminium Industry is expected to generate 1.28 times more return on investment than Lionmesh Prima. However, Indal Aluminium is 1.28 times more volatile than Lionmesh Prima Tbk. It trades about -0.04 of its potential returns per unit of risk. Lionmesh Prima Tbk is currently generating about -0.05 per unit of risk. If you would invest 26,400 in Indal Aluminium Industry on August 30, 2024 and sell it today you would lose (12,800) from holding Indal Aluminium Industry or give up 48.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indal Aluminium Industry vs. Lionmesh Prima Tbk
Performance |
| Timeline |
| Indal Aluminium Industry |
| Lionmesh Prima Tbk |
Indal Aluminium and Lionmesh Prima Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indal Aluminium and Lionmesh Prima
The main advantage of trading using opposite Indal Aluminium and Lionmesh Prima positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indal Aluminium position performs unexpectedly, Lionmesh Prima 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 Lionmesh Prima will offset losses from the drop in Lionmesh Prima's long position.| Indal Aluminium vs. Intanwijaya Internasional Tbk | Indal Aluminium vs. Alumindo Light Metal | Indal Aluminium vs. Champion Pacific Indonesia | Indal Aluminium vs. Betonjaya Manunggal Tbk |
| Lionmesh Prima vs. Lion Metal Works | Lionmesh Prima vs. Pelangi Indah Canindo | Lionmesh Prima vs. Indal Aluminium Industry | Lionmesh Prima vs. Tembaga Mulia Semanan |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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