Correlation Between Bhuwanatala Indah and Lippo Karawaci
Can any of the company-specific risk be diversified away by investing in both Bhuwanatala Indah and Lippo Karawaci 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 Bhuwanatala Indah and Lippo Karawaci into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bhuwanatala Indah Permai and Lippo Karawaci Tbk, you can compare the effects of market volatilities on Bhuwanatala Indah and Lippo Karawaci 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 Bhuwanatala Indah with a short position of Lippo Karawaci. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bhuwanatala Indah and Lippo Karawaci.
Diversification Opportunities for Bhuwanatala Indah and Lippo Karawaci
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bhuwanatala and Lippo is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bhuwanatala Indah Permai and Lippo Karawaci Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lippo Karawaci Tbk and Bhuwanatala Indah 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 Bhuwanatala Indah Permai are associated (or correlated) with Lippo Karawaci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lippo Karawaci Tbk has no effect on the direction of Bhuwanatala Indah i.e., Bhuwanatala Indah and Lippo Karawaci go up and down completely randomly.
Pair Corralation between Bhuwanatala Indah and Lippo Karawaci
Assuming the 90 days trading horizon Bhuwanatala Indah Permai is expected to generate 0.77 times more return on investment than Lippo Karawaci. However, Bhuwanatala Indah Permai is 1.3 times less risky than Lippo Karawaci. It trades about 0.13 of its potential returns per unit of risk. Lippo Karawaci Tbk is currently generating about -0.15 per unit of risk. If you would invest 3,000 in Bhuwanatala Indah Permai on September 2, 2024 and sell it today you would earn a total of 200.00 from holding Bhuwanatala Indah Permai or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bhuwanatala Indah Permai vs. Lippo Karawaci Tbk
Performance |
| Timeline |
| Bhuwanatala Indah Permai |
| Lippo Karawaci Tbk |
Bhuwanatala Indah and Lippo Karawaci Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bhuwanatala Indah and Lippo Karawaci
The main advantage of trading using opposite Bhuwanatala Indah and Lippo Karawaci positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bhuwanatala Indah position performs unexpectedly, Lippo Karawaci 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 Lippo Karawaci will offset losses from the drop in Lippo Karawaci's long position.| Bhuwanatala Indah vs. Lippo Karawaci Tbk | Bhuwanatala Indah vs. Mitra Pinasthika Mustika | Bhuwanatala Indah vs. Jakarta Int Hotels | Bhuwanatala Indah vs. Indosterling Technomedia Tbk |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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