Correlation Between Lion Metal and PT Wahana
Can any of the company-specific risk be diversified away by investing in both Lion Metal and PT Wahana 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 PT Wahana 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 PT Wahana Interfood, you can compare the effects of market volatilities on Lion Metal and PT Wahana 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 PT Wahana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Metal and PT Wahana.
Diversification Opportunities for Lion Metal and PT Wahana
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lion and COCO is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lion Metal Works and PT Wahana Interfood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Wahana Interfood 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 PT Wahana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Wahana Interfood has no effect on the direction of Lion Metal i.e., Lion Metal and PT Wahana go up and down completely randomly.
Pair Corralation between Lion Metal and PT Wahana
Assuming the 90 days trading horizon Lion Metal Works is expected to generate 0.72 times more return on investment than PT Wahana. However, Lion Metal Works is 1.39 times less risky than PT Wahana. It trades about -0.1 of its potential returns per unit of risk. PT Wahana Interfood is currently generating about -0.08 per unit of risk. If you would invest 48,281 in Lion Metal Works on September 1, 2024 and sell it today you would lose (17,481) from holding Lion Metal Works or give up 36.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Metal Works vs. PT Wahana Interfood
Performance |
| Timeline |
| Lion Metal Works |
| PT Wahana Interfood |
Lion Metal and PT Wahana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Metal and PT Wahana
The main advantage of trading using opposite Lion Metal and PT Wahana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Metal position performs unexpectedly, PT Wahana 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 PT Wahana will offset losses from the drop in PT Wahana'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 |
| PT Wahana vs. Garudafood Putra Putri | PT Wahana vs. Sentra Food Indonesia | PT Wahana vs. Campina Ice Cream | PT Wahana vs. Diamond Food Indonesia |
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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