Correlation Between Bank Cimb and Lippo General
Can any of the company-specific risk be diversified away by investing in both Bank Cimb and Lippo General 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 Bank Cimb and Lippo General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Cimb Niaga and Lippo General Insurance, you can compare the effects of market volatilities on Bank Cimb and Lippo General 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 Bank Cimb with a short position of Lippo General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Cimb and Lippo General.
Diversification Opportunities for Bank Cimb and Lippo General
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Lippo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bank Cimb Niaga and Lippo General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lippo General Insurance and Bank Cimb 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 Bank Cimb Niaga are associated (or correlated) with Lippo General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lippo General Insurance has no effect on the direction of Bank Cimb i.e., Bank Cimb and Lippo General go up and down completely randomly.
Pair Corralation between Bank Cimb and Lippo General
Assuming the 90 days trading horizon Bank Cimb Niaga is expected to generate 2.34 times more return on investment than Lippo General. However, Bank Cimb is 2.34 times more volatile than Lippo General Insurance. It trades about -0.14 of its potential returns per unit of risk. Lippo General Insurance is currently generating about -0.42 per unit of risk. If you would invest 172,500 in Bank Cimb Niaga on November 28, 2024 and sell it today you would lose (5,500) from holding Bank Cimb Niaga or give up 3.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Bank Cimb Niaga vs. Lippo General Insurance
Performance |
| Timeline |
| Bank Cimb Niaga |
| Lippo General Insurance |
Bank Cimb and Lippo General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Cimb and Lippo General
The main advantage of trading using opposite Bank Cimb and Lippo General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Cimb position performs unexpectedly, Lippo General 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 General will offset losses from the drop in Lippo General's long position.| Bank Cimb vs. Bank Danamon Indonesia | Bank Cimb vs. Bank Maybank Indonesia | Bank Cimb vs. Bank Pan Indonesia | Bank Cimb vs. Indosat Tbk |
| Lippo General vs. Maskapai Reasuransi Indonesia | Lippo General vs. Lenox Pasifik Investama | Lippo General vs. Paninvest Tbk | Lippo General vs. Bank Mayapada Internasional |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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