Correlation Between Prima Alloy and Alumindo Light
Can any of the company-specific risk be diversified away by investing in both Prima Alloy and Alumindo Light 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 Prima Alloy and Alumindo Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prima Alloy Steel and Alumindo Light Metal, you can compare the effects of market volatilities on Prima Alloy and Alumindo Light 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 Prima Alloy with a short position of Alumindo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prima Alloy and Alumindo Light.
Diversification Opportunities for Prima Alloy and Alumindo Light
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Prima and Alumindo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Prima Alloy Steel and Alumindo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumindo Light Metal and Prima Alloy 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 Prima Alloy Steel are associated (or correlated) with Alumindo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumindo Light Metal has no effect on the direction of Prima Alloy i.e., Prima Alloy and Alumindo Light go up and down completely randomly.
Pair Corralation between Prima Alloy and Alumindo Light
Assuming the 90 days trading horizon Prima Alloy Steel is expected to generate 0.72 times more return on investment than Alumindo Light. However, Prima Alloy Steel is 1.39 times less risky than Alumindo Light. It trades about -0.02 of its potential returns per unit of risk. Alumindo Light Metal is currently generating about -0.05 per unit of risk. If you would invest 15,200 in Prima Alloy Steel on August 30, 2024 and sell it today you would lose (5,500) from holding Prima Alloy Steel or give up 36.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prima Alloy Steel vs. Alumindo Light Metal
Performance |
| Timeline |
| Prima Alloy Steel |
| Alumindo Light Metal |
Prima Alloy and Alumindo Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prima Alloy and Alumindo Light
The main advantage of trading using opposite Prima Alloy and Alumindo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prima Alloy position performs unexpectedly, Alumindo Light 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 Alumindo Light will offset losses from the drop in Alumindo Light's long position.| Prima Alloy vs. Pan Brothers Tbk | Prima Alloy vs. Ricky Putra Globalindo | Prima Alloy vs. Asia Pacific Fibers | Prima Alloy vs. Multi Prima Sejahtera |
| Alumindo Light vs. Barito Pacific Tbk | Alumindo Light vs. Charoen Pokphand Indonesia | Alumindo Light vs. Indocement Tunggal Prakarsa |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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