Correlation Between Hero Supermarket and Lippo General
Can any of the company-specific risk be diversified away by investing in both Hero Supermarket 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 Hero Supermarket and Lippo General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hero Supermarket Tbk and Lippo General Insurance, you can compare the effects of market volatilities on Hero Supermarket 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 Hero Supermarket with a short position of Lippo General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hero Supermarket and Lippo General.
Diversification Opportunities for Hero Supermarket and Lippo General
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hero and Lippo is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Hero Supermarket Tbk 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 Hero Supermarket 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 Hero Supermarket Tbk 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 Hero Supermarket i.e., Hero Supermarket and Lippo General go up and down completely randomly.
Pair Corralation between Hero Supermarket and Lippo General
Assuming the 90 days trading horizon Hero Supermarket Tbk is expected to under-perform the Lippo General. In addition to that, Hero Supermarket is 1.56 times more volatile than Lippo General Insurance. It trades about -0.31 of its total potential returns per unit of risk. Lippo General Insurance is currently generating about 0.05 per unit of volatility. If you would invest 36,200 in Lippo General Insurance on August 30, 2024 and sell it today you would earn a total of 400.00 from holding Lippo General Insurance or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hero Supermarket Tbk vs. Lippo General Insurance
Performance |
| Timeline |
| Hero Supermarket Tbk |
| Lippo General Insurance |
Hero Supermarket and Lippo General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hero Supermarket and Lippo General
The main advantage of trading using opposite Hero Supermarket and Lippo General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hero Supermarket 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.| Hero Supermarket vs. Fast Food Indonesia | Hero Supermarket vs. Enseval Putra Megatrading | Hero Supermarket vs. Matahari Putra Prima | Hero Supermarket vs. Hexindo Adiperkasa 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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