Correlation Between Legacy Iron and Aneka Tambang
Can any of the company-specific risk be diversified away by investing in both Legacy Iron and Aneka Tambang 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 Legacy Iron and Aneka Tambang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legacy Iron Ore and Aneka Tambang Tbk, you can compare the effects of market volatilities on Legacy Iron and Aneka Tambang 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 Legacy Iron with a short position of Aneka Tambang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legacy Iron and Aneka Tambang.
Diversification Opportunities for Legacy Iron and Aneka Tambang
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legacy and Aneka is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Legacy Iron Ore and Aneka Tambang Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aneka Tambang Tbk and Legacy Iron 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 Legacy Iron Ore are associated (or correlated) with Aneka Tambang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aneka Tambang Tbk has no effect on the direction of Legacy Iron i.e., Legacy Iron and Aneka Tambang go up and down completely randomly.
Pair Corralation between Legacy Iron and Aneka Tambang
Assuming the 90 days trading horizon Legacy Iron Ore is expected to under-perform the Aneka Tambang. In addition to that, Legacy Iron is 1.94 times more volatile than Aneka Tambang Tbk. It trades about -0.22 of its total potential returns per unit of risk. Aneka Tambang Tbk is currently generating about -0.1 per unit of volatility. If you would invest 91.00 in Aneka Tambang Tbk on August 27, 2024 and sell it today you would lose (5.00) from holding Aneka Tambang Tbk or give up 5.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legacy Iron Ore vs. Aneka Tambang Tbk
Performance |
| Timeline |
| Legacy Iron Ore |
| Aneka Tambang Tbk |
Legacy Iron and Aneka Tambang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legacy Iron and Aneka Tambang
The main advantage of trading using opposite Legacy Iron and Aneka Tambang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legacy Iron position performs unexpectedly, Aneka Tambang 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 Aneka Tambang will offset losses from the drop in Aneka Tambang's long position.| Legacy Iron vs. Northern Star Resources | Legacy Iron vs. Evolution Mining | Legacy Iron vs. Bluescope Steel | Legacy Iron vs. Sandfire Resources NL |
| Aneka Tambang vs. Legacy Iron Ore | Aneka Tambang vs. M3 Mining | Aneka Tambang vs. Perseus Mining | Aneka Tambang vs. Aspire Mining |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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