Correlation Between Champion Iron and Aneka Tambang
Can any of the company-specific risk be diversified away by investing in both Champion Iron 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 Champion Iron and Aneka Tambang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Aneka Tambang Tbk, you can compare the effects of market volatilities on Champion Iron 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 Champion Iron with a short position of Aneka Tambang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Aneka Tambang.
Diversification Opportunities for Champion Iron and Aneka Tambang
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Champion and Aneka is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron 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 Champion Iron 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 Champion Iron 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 Champion Iron i.e., Champion Iron and Aneka Tambang go up and down completely randomly.
Pair Corralation between Champion Iron and Aneka Tambang
Assuming the 90 days trading horizon Champion Iron is expected to generate 2.25 times less return on investment than Aneka Tambang. In addition to that, Champion Iron is 1.35 times more volatile than Aneka Tambang Tbk. It trades about 0.1 of its total potential returns per unit of risk. Aneka Tambang Tbk is currently generating about 0.32 per unit of volatility. If you would invest 86.00 in Aneka Tambang Tbk on September 25, 2024 and sell it today you would earn a total of 8.00 from holding Aneka Tambang Tbk or generate 9.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
Champion Iron vs. Aneka Tambang Tbk
Performance |
Timeline |
Champion Iron |
Aneka Tambang Tbk |
Champion Iron and Aneka Tambang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Champion Iron and Aneka Tambang
The main advantage of trading using opposite Champion Iron and Aneka Tambang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron 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.Champion Iron vs. Northern Star Resources | Champion Iron vs. Evolution Mining | Champion Iron vs. Aneka Tambang Tbk | Champion Iron vs. Sandfire Resources NL |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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