Correlation Between Aneka Tambang and DY6 Metals

Can any of the company-specific risk be diversified away by investing in both Aneka Tambang and DY6 Metals 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 Aneka Tambang and DY6 Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aneka Tambang Tbk and DY6 Metals, you can compare the effects of market volatilities on Aneka Tambang and DY6 Metals 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 Aneka Tambang with a short position of DY6 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and DY6 Metals.

Diversification Opportunities for Aneka Tambang and DY6 Metals

-0.05

Correlation Coefficient

Aneka Tambang  DY6 Metals

Good diversification

The 3 months correlation between Aneka and DY6 is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and DY6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DY6 Metals and Aneka Tambang 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 Aneka Tambang Tbk are associated (or correlated) with DY6 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DY6 Metals has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and DY6 Metals go up and down completely randomly.

Pair Corralation between Aneka Tambang and DY6 Metals

Assuming the 90 days trading horizon Aneka Tambang is expected to generate 7.61 times less return on investment than DY6 Metals. But when comparing it to its historical volatility, Aneka Tambang Tbk is 14.31 times less risky than DY6 Metals. It trades about 0.03 of its potential returns per unit of risk. DY6 Metals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  24.00  in DY6 Metals on September 25, 2024 and sell it today you would lose (19.50) from holding DY6 Metals or give up 81.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.85%
Values	Daily Returns

Aneka Tambang Tbk  vs.  DY6 Metals

Aneka Tambang Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aneka Tambang Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

DY6 Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DY6 Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Aneka Tambang and DY6 Metals

The main advantage of trading using opposite Aneka Tambang and DY6 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aneka Tambang position performs unexpectedly, DY6 Metals 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 DY6 Metals will offset losses from the drop in DY6 Metals' long position.

The idea behind Aneka Tambang Tbk and DY6 Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.