Correlation Between Capital Financial and Lippo General
Can any of the company-specific risk be diversified away by investing in both Capital Financial 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 Capital Financial and Lippo General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Financial Indonesia and Lippo General Insurance, you can compare the effects of market volatilities on Capital Financial 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 Capital Financial with a short position of Lippo General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Financial and Lippo General.
Diversification Opportunities for Capital Financial and Lippo General
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capital and Lippo is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Capital Financial Indonesia 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 Capital Financial 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 Capital Financial Indonesia 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 Capital Financial i.e., Capital Financial and Lippo General go up and down completely randomly.
Pair Corralation between Capital Financial and Lippo General
Assuming the 90 days trading horizon Capital Financial Indonesia is expected to generate 1.35 times more return on investment than Lippo General. However, Capital Financial is 1.35 times more volatile than Lippo General Insurance. It trades about 0.07 of its potential returns per unit of risk. Lippo General Insurance is currently generating about -0.02 per unit of risk. If you would invest 47,200 in Capital Financial Indonesia on August 29, 2024 and sell it today you would earn a total of 3,800 from holding Capital Financial Indonesia or generate 8.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Capital Financial Indonesia vs. Lippo General Insurance
Performance |
| Timeline |
| Capital Financial |
| Lippo General Insurance |
Capital Financial and Lippo General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Financial and Lippo General
The main advantage of trading using opposite Capital Financial and Lippo General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Financial 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.| Capital Financial vs. Pacific Strategic Financial | Capital Financial vs. Bk Harda Internasional | Capital Financial vs. Indoritel Makmur Internasional | Capital Financial vs. Bank Sinarmas 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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