Correlation Between PT Winner and Lion Metal
Can any of the company-specific risk be diversified away by investing in both PT Winner and Lion Metal 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 PT Winner and Lion Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Winner Nusantara and Lion Metal Works, you can compare the effects of market volatilities on PT Winner and Lion Metal 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 PT Winner with a short position of Lion Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Winner and Lion Metal.
Diversification Opportunities for PT Winner and Lion Metal
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WINR and Lion is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding PT Winner Nusantara and Lion Metal Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Metal Works and PT Winner 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 PT Winner Nusantara are associated (or correlated) with Lion Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Metal Works has no effect on the direction of PT Winner i.e., PT Winner and Lion Metal go up and down completely randomly.
Pair Corralation between PT Winner and Lion Metal
Assuming the 90 days trading horizon PT Winner Nusantara is expected to generate 0.99 times more return on investment than Lion Metal. However, PT Winner Nusantara is 1.01 times less risky than Lion Metal. It trades about -0.1 of its potential returns per unit of risk. Lion Metal Works is currently generating about -0.17 per unit of risk. If you would invest 1,600 in PT Winner Nusantara on September 2, 2024 and sell it today you would lose (200.00) from holding PT Winner Nusantara or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Winner Nusantara vs. Lion Metal Works
Performance |
| Timeline |
| PT Winner Nusantara |
| Lion Metal Works |
PT Winner and Lion Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Winner and Lion Metal
The main advantage of trading using opposite PT Winner and Lion Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Winner position performs unexpectedly, Lion Metal 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 Lion Metal will offset losses from the drop in Lion Metal's long position.| PT Winner vs. Visi Media Asia | PT Winner vs. Lion Metal Works | PT Winner vs. Garuda Metalindo Tbk | PT Winner vs. Media Nusantara Citra |
| Lion Metal vs. Matahari Department Store | Lion Metal vs. Multi Medika Internasional | Lion Metal vs. Visi Media Asia | Lion Metal vs. Bayan Resources 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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