Correlation Between Capital Financial and Lippo Karawaci
Can any of the company-specific risk be diversified away by investing in both Capital Financial 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 Capital Financial and Lippo Karawaci 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 Karawaci Tbk, you can compare the effects of market volatilities on Capital Financial 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 Capital Financial with a short position of Lippo Karawaci. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Financial and Lippo Karawaci.
Diversification Opportunities for Capital Financial and Lippo Karawaci
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Capital and Lippo is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Capital Financial Indonesia 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 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 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 Capital Financial i.e., Capital Financial and Lippo Karawaci go up and down completely randomly.
Pair Corralation between Capital Financial and Lippo Karawaci
Assuming the 90 days trading horizon Capital Financial Indonesia is expected to under-perform the Lippo Karawaci. But the stock apears to be less risky and, when comparing its historical volatility, Capital Financial Indonesia is 1.41 times less risky than Lippo Karawaci. The stock trades about -0.02 of its potential returns per unit of risk. The Lippo Karawaci Tbk is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 8,600 in Lippo Karawaci Tbk on September 2, 2024 and sell it today you would earn a total of 2,100 from holding Lippo Karawaci Tbk or generate 24.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Financial Indonesia vs. Lippo Karawaci Tbk
Performance |
| Timeline |
| Capital Financial |
| Lippo Karawaci Tbk |
Capital Financial and Lippo Karawaci Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Financial and Lippo Karawaci
The main advantage of trading using opposite Capital Financial and Lippo Karawaci positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Financial 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.| Capital Financial vs. Ace Hardware Indonesia | Capital Financial vs. Merdeka Copper Gold | Capital Financial vs. Mitra Pinasthika Mustika | Capital Financial vs. Jakarta Int Hotels |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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