Correlation Between Lion Metal and Weha Transportasi
Can any of the company-specific risk be diversified away by investing in both Lion Metal and Weha Transportasi 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 Weha Transportasi 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 Weha Transportasi Indonesia, you can compare the effects of market volatilities on Lion Metal and Weha Transportasi 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 Weha Transportasi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Metal and Weha Transportasi.
Diversification Opportunities for Lion Metal and Weha Transportasi
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lion and Weha is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lion Metal Works and Weha Transportasi Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weha Transportasi 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 Weha Transportasi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weha Transportasi has no effect on the direction of Lion Metal i.e., Lion Metal and Weha Transportasi go up and down completely randomly.
Pair Corralation between Lion Metal and Weha Transportasi
Assuming the 90 days trading horizon Lion Metal Works is expected to under-perform the Weha Transportasi. In addition to that, Lion Metal is 1.49 times more volatile than Weha Transportasi Indonesia. It trades about -0.1 of its total potential returns per unit of risk. Weha Transportasi Indonesia is currently generating about 0.09 per unit of volatility. If you would invest 9,938 in Weha Transportasi Indonesia on September 1, 2024 and sell it today you would earn a total of 2,362 from holding Weha Transportasi Indonesia or generate 23.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Metal Works vs. Weha Transportasi Indonesia
Performance |
| Timeline |
| Lion Metal Works |
| Weha Transportasi |
Lion Metal and Weha Transportasi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Metal and Weha Transportasi
The main advantage of trading using opposite Lion Metal and Weha Transportasi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Metal position performs unexpectedly, Weha Transportasi 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 Weha Transportasi will offset losses from the drop in Weha Transportasi'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 |
| Weha Transportasi vs. PT Temas Tbk | Weha Transportasi vs. Dosni Roha Indonesia | Weha Transportasi vs. Rig Tenders Tbk | Weha Transportasi vs. Samudera Indonesia 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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