Correlation Between Lion Metal and Chandra Asri
Can any of the company-specific risk be diversified away by investing in both Lion Metal and Chandra Asri 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 Chandra Asri 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 Chandra Asri Petrochemical, you can compare the effects of market volatilities on Lion Metal and Chandra Asri 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 Chandra Asri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Metal and Chandra Asri.
Diversification Opportunities for Lion Metal and Chandra Asri
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lion and Chandra is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Lion Metal Works and Chandra Asri Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chandra Asri Petroch 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 Chandra Asri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chandra Asri Petroch has no effect on the direction of Lion Metal i.e., Lion Metal and Chandra Asri go up and down completely randomly.
Pair Corralation between Lion Metal and Chandra Asri
Assuming the 90 days trading horizon Lion Metal Works is expected to under-perform the Chandra Asri. In addition to that, Lion Metal is 1.34 times more volatile than Chandra Asri Petrochemical. It trades about -0.29 of its total potential returns per unit of risk. Chandra Asri Petrochemical is currently generating about 0.11 per unit of volatility. If you would invest 700,000 in Chandra Asri Petrochemical on November 28, 2024 and sell it today you would earn a total of 77,500 from holding Chandra Asri Petrochemical or generate 11.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Lion Metal Works vs. Chandra Asri Petrochemical
Performance |
| Timeline |
| Lion Metal Works |
| Chandra Asri Petroch |
Lion Metal and Chandra Asri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Metal and Chandra Asri
The main advantage of trading using opposite Lion Metal and Chandra Asri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Metal position performs unexpectedly, Chandra Asri 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 Chandra Asri will offset losses from the drop in Chandra Asri'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 |
| Chandra Asri vs. Barito Pacific Tbk | Chandra Asri vs. Pabrik Kertas Tjiwi | Chandra Asri vs. Charoen Pokphand Indonesia | Chandra Asri vs. Indah Kiat Pulp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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