Correlation Between Lion Metal and PT Hatten

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

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

Diversification Opportunities for Lion Metal and PT Hatten

-0.36

Correlation Coefficient

Lion Metal  PT Hatten

Very good diversification

The 3 months correlation between Lion and WINE is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lion Metal Works and PT Hatten Bali in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Hatten Bali and Lion Metal 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 Lion Metal Works are associated (or correlated) with PT Hatten. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Hatten Bali has no effect on the direction of Lion Metal i.e., Lion Metal and PT Hatten go up and down completely randomly.

Pair Corralation between Lion Metal and PT Hatten

Assuming the 90 days trading horizon Lion Metal Works is expected to generate 2.0 times more return on investment than PT Hatten. However, Lion Metal is 2.0 times more volatile than PT Hatten Bali. It trades about 0.05 of its potential returns per unit of risk. PT Hatten Bali is currently generating about -0.04 per unit of risk. If you would invest  40,000  in Lion Metal Works on December 29, 2024 and sell it today you would lose (800.00) from holding Lion Metal Works or give up 2.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lion Metal Works  vs.  PT Hatten Bali

Lion Metal Works

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lion Metal Works are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Lion Metal disclosed solid returns over the last few months and may actually be approaching a breakup point.

PT Hatten Bali

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Hatten Bali 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Lion Metal and PT Hatten

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

The idea behind Lion Metal Works and PT Hatten Bali 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.