Correlation Between Tera Data and Lion Metal

Can any of the company-specific risk be diversified away by investing in both Tera Data 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 Tera Data and Lion Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tera Data Indonusa and Lion Metal Works, you can compare the effects of market volatilities on Tera Data 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 Tera Data with a short position of Lion Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tera Data and Lion Metal.

Diversification Opportunities for Tera Data and Lion Metal

0.22

Correlation Coefficient

Tera Data  Lion Metal

Modest diversification

The 3 months correlation between Tera and Lion is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Tera Data Indonusa 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 Tera Data 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 Tera Data Indonusa 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 Tera Data i.e., Tera Data and Lion Metal go up and down completely randomly.

Pair Corralation between Tera Data and Lion Metal

Assuming the 90 days trading horizon Tera Data Indonusa is expected to under-perform the Lion Metal. But the stock apears to be less risky and, when comparing its historical volatility, Tera Data Indonusa is 1.37 times less risky than Lion Metal. The stock trades about -0.01 of its potential returns per unit of risk. The Lion Metal Works is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  48,952  in Lion Metal Works on September 1, 2024 and sell it today you would lose (18,152) from holding Lion Metal Works or give up 37.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Tera Data Indonusa  vs.  Lion Metal Works

Tera Data Indonusa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tera Data Indonusa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Lion Metal Works

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion Metal Works has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Tera Data and Lion Metal

The main advantage of trading using opposite Tera Data and Lion Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tera Data 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.

The idea behind Tera Data Indonusa and Lion Metal Works 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.