Correlation Between Intiland Development and Lippo Karawaci
Can any of the company-specific risk be diversified away by investing in both Intiland Development 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 Intiland Development and Lippo Karawaci into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intiland Development Tbk and Lippo Karawaci Tbk, you can compare the effects of market volatilities on Intiland Development 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 Intiland Development with a short position of Lippo Karawaci. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intiland Development and Lippo Karawaci.
Diversification Opportunities for Intiland Development and Lippo Karawaci
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Intiland and Lippo is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Intiland Development Tbk 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 Intiland Development 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 Intiland Development Tbk 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 Intiland Development i.e., Intiland Development and Lippo Karawaci go up and down completely randomly.
Pair Corralation between Intiland Development and Lippo Karawaci
Assuming the 90 days trading horizon Intiland Development Tbk is expected to generate 0.41 times more return on investment than Lippo Karawaci. However, Intiland Development Tbk is 2.43 times less risky than Lippo Karawaci. It trades about -0.32 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 18,100 in Intiland Development Tbk on September 2, 2024 and sell it today you would lose (1,600) from holding Intiland Development Tbk or give up 8.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intiland Development Tbk vs. Lippo Karawaci Tbk
Performance |
| Timeline |
| Intiland Development Tbk |
| Lippo Karawaci Tbk |
Intiland Development and Lippo Karawaci Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intiland Development and Lippo Karawaci
The main advantage of trading using opposite Intiland Development and Lippo Karawaci positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intiland Development 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.| Intiland Development vs. Sentul City Tbk | Intiland Development vs. Modernland Realty Ltd | Intiland Development vs. Kawasan Industri Jababeka | Intiland Development vs. Ciputra Development 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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