Correlation Between Lion Metal and Capital Financial
Can any of the company-specific risk be diversified away by investing in both Lion Metal and Capital Financial 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 Lion Metal and Capital Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Metal Works and Capital Financial Indonesia, you can compare the effects of market volatilities on Lion Metal and Capital Financial 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 Lion Metal with a short position of Capital Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Metal and Capital Financial.
Diversification Opportunities for Lion Metal and Capital Financial
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lion and Capital is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lion Metal Works and Capital Financial Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Financial and Lion Metal 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 Lion Metal Works are associated (or correlated) with Capital Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Financial has no effect on the direction of Lion Metal i.e., Lion Metal and Capital Financial go up and down completely randomly.
Pair Corralation between Lion Metal and Capital Financial
Assuming the 90 days trading horizon Lion Metal Works is expected to under-perform the Capital Financial. In addition to that, Lion Metal is 1.18 times more volatile than Capital Financial Indonesia. It trades about -0.19 of its total potential returns per unit of risk. Capital Financial Indonesia is currently generating about 0.07 per unit of volatility. If you would invest 47,200 in Capital Financial Indonesia on August 29, 2024 and sell it today you would earn a total of 3,800 from holding Capital Financial Indonesia or generate 8.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Metal Works vs. Capital Financial Indonesia
Performance |
| Timeline |
| Lion Metal Works |
| Capital Financial |
Lion Metal and Capital Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Metal and Capital Financial
The main advantage of trading using opposite Lion Metal and Capital Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Metal position performs unexpectedly, Capital Financial 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 Capital Financial will offset losses from the drop in Capital Financial's long position.| Lion Metal vs. Lionmesh Prima Tbk | Lion Metal vs. Pelangi Indah Canindo | Lion Metal vs. Indal Aluminium Industry | Lion Metal vs. Intanwijaya Internasional Tbk |
| Capital Financial vs. Pacific Strategic Financial | Capital Financial vs. Bk Harda Internasional | Capital Financial vs. Indoritel Makmur Internasional | Capital Financial vs. Bank Sinarmas 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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