Correlation Between Indorama Synthetics and Lion Metal
Can any of the company-specific risk be diversified away by investing in both Indorama Synthetics 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 Indorama Synthetics and Lion Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indorama Synthetics Tbk and Lion Metal Works, you can compare the effects of market volatilities on Indorama Synthetics 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 Indorama Synthetics with a short position of Lion Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indorama Synthetics and Lion Metal.
Diversification Opportunities for Indorama Synthetics and Lion Metal
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Indorama and Lion is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Indorama Synthetics 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 Indorama Synthetics 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 Indorama Synthetics 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 Indorama Synthetics i.e., Indorama Synthetics and Lion Metal go up and down completely randomly.
Pair Corralation between Indorama Synthetics and Lion Metal
Assuming the 90 days trading horizon Indorama Synthetics Tbk is expected to generate 0.35 times more return on investment than Lion Metal. However, Indorama Synthetics Tbk is 2.88 times less risky than Lion Metal. It trades about -0.21 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 300,000 in Indorama Synthetics Tbk on September 1, 2024 and sell it today you would lose (23,000) from holding Indorama Synthetics Tbk or give up 7.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indorama Synthetics Tbk vs. Lion Metal Works
Performance |
| Timeline |
| Indorama Synthetics Tbk |
| Lion Metal Works |
Indorama Synthetics and Lion Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indorama Synthetics and Lion Metal
The main advantage of trading using opposite Indorama Synthetics and Lion Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indorama Synthetics 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.| Indorama Synthetics vs. Japfa Comfeed Indonesia | Indorama Synthetics vs. Charoen Pokphand Indonesia | Indorama Synthetics vs. Erajaya Swasembada Tbk | Indorama Synthetics vs. Indofood Cbp Sukses |
| Lion Metal vs. Lionmesh Prima Tbk | Lion Metal vs. Pelangi Indah Canindo | Lion Metal vs. Indal Aluminium Industry | Lion Metal vs. Intanwijaya Internasional Tbk |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |