Correlation Between Tembaga Mulia and Lionmesh Prima

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

By analyzing existing cross correlation between Tembaga Mulia Semanan and Lionmesh Prima Tbk, you can compare the effects of market volatilities on Tembaga Mulia and Lionmesh Prima 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 Tembaga Mulia with a short position of Lionmesh Prima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tembaga Mulia and Lionmesh Prima.

Diversification Opportunities for Tembaga Mulia and Lionmesh Prima

0.46

Correlation Coefficient

Tembaga Mulia  Lionmesh Prima

Very weak diversification

The 3 months correlation between Tembaga and Lionmesh is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Tembaga Mulia Semanan and Lionmesh Prima Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lionmesh Prima Tbk and Tembaga Mulia 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 Tembaga Mulia Semanan are associated (or correlated) with Lionmesh Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lionmesh Prima Tbk has no effect on the direction of Tembaga Mulia i.e., Tembaga Mulia and Lionmesh Prima go up and down completely randomly.

Pair Corralation between Tembaga Mulia and Lionmesh Prima

Assuming the 90 days trading horizon Tembaga Mulia Semanan is expected to generate 0.68 times more return on investment than Lionmesh Prima. However, Tembaga Mulia Semanan is 1.47 times less risky than Lionmesh Prima. It trades about -0.03 of its potential returns per unit of risk. Lionmesh Prima Tbk is currently generating about -0.31 per unit of risk. If you would invest  93,500  in Tembaga Mulia Semanan on December 29, 2024 and sell it today you would lose (3,500) from holding Tembaga Mulia Semanan or give up 3.74% of portfolio value over 90 days.

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

Tembaga Mulia Semanan  vs.  Lionmesh Prima Tbk

Tembaga Mulia Semanan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tembaga Mulia Semanan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Tembaga Mulia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Lionmesh Prima Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lionmesh Prima Tbk 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 Tembaga Mulia and Lionmesh Prima

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

The idea behind Tembaga Mulia Semanan and Lionmesh Prima Tbk 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.