Correlation Between Lion Metal and Samudera Indonesia
Can any of the company-specific risk be diversified away by investing in both Lion Metal and Samudera Indonesia 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 Samudera Indonesia 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 Samudera Indonesia Tbk, you can compare the effects of market volatilities on Lion Metal and Samudera Indonesia 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 Samudera Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Metal and Samudera Indonesia.
Diversification Opportunities for Lion Metal and Samudera Indonesia
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lion and Samudera is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lion Metal Works and Samudera Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samudera Indonesia Tbk 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 Samudera Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samudera Indonesia Tbk has no effect on the direction of Lion Metal i.e., Lion Metal and Samudera Indonesia go up and down completely randomly.
Pair Corralation between Lion Metal and Samudera Indonesia
Assuming the 90 days trading horizon Lion Metal Works is expected to generate 2.38 times more return on investment than Samudera Indonesia. However, Lion Metal is 2.38 times more volatile than Samudera Indonesia Tbk. It trades about 0.01 of its potential returns per unit of risk. Samudera Indonesia Tbk is currently generating about -0.02 per unit of risk. If you would invest 83,062 in Lion Metal Works on November 9, 2024 and sell it today you would lose (31,062) from holding Lion Metal Works or give up 37.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Metal Works vs. Samudera Indonesia Tbk
Performance |
| Timeline |
| Lion Metal Works |
| Samudera Indonesia Tbk |
Lion Metal and Samudera Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Metal and Samudera Indonesia
The main advantage of trading using opposite Lion Metal and Samudera Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Metal position performs unexpectedly, Samudera Indonesia 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 Samudera Indonesia will offset losses from the drop in Samudera Indonesia's long position.| Lion Metal vs. Adhi Karya Persero | Lion Metal vs. Waskita Karya Persero | Lion Metal vs. Pembangunan Perumahan PT | Lion Metal vs. Jasa Marga Tbk |
| Samudera Indonesia vs. PT Temas Tbk | Samudera Indonesia vs. Petrosea Tbk | Samudera Indonesia vs. Rig Tenders Tbk | Samudera Indonesia vs. Rukun Raharja 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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