Correlation Between Ioneer and PT Semen

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

By analyzing existing cross correlation between ioneer Ltd American and PT Semen Indonesia, you can compare the effects of market volatilities on Ioneer and PT Semen 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 Ioneer with a short position of PT Semen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ioneer and PT Semen.

Diversification Opportunities for Ioneer and PT Semen

0.76

Correlation Coefficient

Ioneer  PT Semen

Poor diversification

The 3 months correlation between Ioneer and PSGTF is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ioneer Ltd American and PT Semen Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Semen Indonesia and Ioneer 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 ioneer Ltd American are associated (or correlated) with PT Semen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Semen Indonesia has no effect on the direction of Ioneer i.e., Ioneer and PT Semen go up and down completely randomly.

Pair Corralation between Ioneer and PT Semen

Given the investment horizon of 90 days ioneer Ltd American is expected to under-perform the PT Semen. In addition to that, Ioneer is 3.35 times more volatile than PT Semen Indonesia. It trades about -0.09 of its total potential returns per unit of risk. PT Semen Indonesia is currently generating about -0.13 per unit of volatility. If you would invest  26.00  in PT Semen Indonesia on October 10, 2024 and sell it today you would lose (3.00) from holding PT Semen Indonesia or give up 11.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

ioneer Ltd American  vs.  PT Semen Indonesia

ioneer American

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ioneer Ltd American has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

PT Semen Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Semen Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Ioneer and PT Semen

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

The idea behind ioneer Ltd American and PT Semen Indonesia 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.