Correlation Between Kabelindo Murni and Lion Metal
Can any of the company-specific risk be diversified away by investing in both Kabelindo Murni 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 Kabelindo Murni and Lion Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kabelindo Murni Tbk and Lion Metal Works, you can compare the effects of market volatilities on Kabelindo Murni 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 Kabelindo Murni with a short position of Lion Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kabelindo Murni and Lion Metal.
Diversification Opportunities for Kabelindo Murni and Lion Metal
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kabelindo and Lion is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Kabelindo Murni 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 Kabelindo Murni 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 Kabelindo Murni 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 Kabelindo Murni i.e., Kabelindo Murni and Lion Metal go up and down completely randomly.
Pair Corralation between Kabelindo Murni and Lion Metal
Assuming the 90 days trading horizon Kabelindo Murni Tbk is expected to generate 0.52 times more return on investment than Lion Metal. However, Kabelindo Murni Tbk is 1.91 times less risky than Lion Metal. It trades about 0.04 of its potential returns per unit of risk. Lion Metal Works is currently generating about -0.03 per unit of risk. If you would invest 24,887 in Kabelindo Murni Tbk on August 28, 2024 and sell it today you would earn a total of 5,913 from holding Kabelindo Murni Tbk or generate 23.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.71% |
| Values | Daily Returns |
Kabelindo Murni Tbk vs. Lion Metal Works
Performance |
| Timeline |
| Kabelindo Murni Tbk |
| Lion Metal Works |
Kabelindo Murni and Lion Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kabelindo Murni and Lion Metal
The main advantage of trading using opposite Kabelindo Murni and Lion Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kabelindo Murni 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.The idea behind Kabelindo Murni Tbk and Lion Metal Works pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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