Correlation Between Lion Metal and PT Pelayaran
Can any of the company-specific risk be diversified away by investing in both Lion Metal and PT Pelayaran 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 Pelayaran 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 Pelayaran Tamarin, you can compare the effects of market volatilities on Lion Metal and PT Pelayaran 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 Pelayaran. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Metal and PT Pelayaran.
Diversification Opportunities for Lion Metal and PT Pelayaran
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lion and TAMU is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lion Metal Works and PT Pelayaran Tamarin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Pelayaran Tamarin 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 Pelayaran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Pelayaran Tamarin has no effect on the direction of Lion Metal i.e., Lion Metal and PT Pelayaran go up and down completely randomly.
Pair Corralation between Lion Metal and PT Pelayaran
Assuming the 90 days trading horizon Lion Metal Works is expected to generate 0.67 times more return on investment than PT Pelayaran. However, Lion Metal Works is 1.49 times less risky than PT Pelayaran. It trades about -0.03 of its potential returns per unit of risk. PT Pelayaran Tamarin is currently generating about -0.03 per unit of risk. If you would invest 61,928 in Lion Metal Works on August 29, 2024 and sell it today you would lose (31,928) from holding Lion Metal Works or give up 51.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Lion Metal Works vs. PT Pelayaran Tamarin
Performance |
| Timeline |
| Lion Metal Works |
| PT Pelayaran Tamarin |
Lion Metal and PT Pelayaran Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Metal and PT Pelayaran
The main advantage of trading using opposite Lion Metal and PT Pelayaran positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Metal position performs unexpectedly, PT Pelayaran 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 Pelayaran will offset losses from the drop in PT Pelayaran's long position.The idea behind Lion Metal Works and PT Pelayaran Tamarin 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.| PT Pelayaran vs. Envy Technologies Indonesia | PT Pelayaran vs. PT Bank Bisnis | PT Pelayaran vs. Cisarua Mountain Dairy | PT Pelayaran vs. PT Wahana Interfood |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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