Correlation Between MotorCycle Holdings and Aneka Tambang
Can any of the company-specific risk be diversified away by investing in both MotorCycle Holdings and Aneka Tambang 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 MotorCycle Holdings and Aneka Tambang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MotorCycle Holdings and Aneka Tambang Tbk, you can compare the effects of market volatilities on MotorCycle Holdings and Aneka Tambang 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 MotorCycle Holdings with a short position of Aneka Tambang. Check out your portfolio center. Please also check ongoing floating volatility patterns of MotorCycle Holdings and Aneka Tambang.
Diversification Opportunities for MotorCycle Holdings and Aneka Tambang
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MotorCycle and Aneka is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding MotorCycle Holdings and Aneka Tambang Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aneka Tambang Tbk and MotorCycle Holdings 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 MotorCycle Holdings are associated (or correlated) with Aneka Tambang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aneka Tambang Tbk has no effect on the direction of MotorCycle Holdings i.e., MotorCycle Holdings and Aneka Tambang go up and down completely randomly.
Pair Corralation between MotorCycle Holdings and Aneka Tambang
Assuming the 90 days trading horizon MotorCycle Holdings is expected to generate 2.14 times more return on investment than Aneka Tambang. However, MotorCycle Holdings is 2.14 times more volatile than Aneka Tambang Tbk. It trades about 0.0 of its potential returns per unit of risk. Aneka Tambang Tbk is currently generating about -0.01 per unit of risk. If you would invest 199.00 in MotorCycle Holdings on August 29, 2024 and sell it today you would lose (40.00) from holding MotorCycle Holdings or give up 20.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
MotorCycle Holdings vs. Aneka Tambang Tbk
Performance |
| Timeline |
| MotorCycle Holdings |
| Aneka Tambang Tbk |
MotorCycle Holdings and Aneka Tambang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MotorCycle Holdings and Aneka Tambang
The main advantage of trading using opposite MotorCycle Holdings and Aneka Tambang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MotorCycle Holdings position performs unexpectedly, Aneka Tambang 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 Aneka Tambang will offset losses from the drop in Aneka Tambang's long position.| MotorCycle Holdings vs. Summit Resources Limited | MotorCycle Holdings vs. Champion Iron | MotorCycle Holdings vs. Ridley | MotorCycle Holdings vs. Peel Mining |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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