Correlation Between Hexindo Adiperkasa and Lautan Luas
Can any of the company-specific risk be diversified away by investing in both Hexindo Adiperkasa and Lautan Luas 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 Hexindo Adiperkasa and Lautan Luas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hexindo Adiperkasa Tbk and Lautan Luas Tbk, you can compare the effects of market volatilities on Hexindo Adiperkasa and Lautan Luas 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 Hexindo Adiperkasa with a short position of Lautan Luas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexindo Adiperkasa and Lautan Luas.
Diversification Opportunities for Hexindo Adiperkasa and Lautan Luas
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hexindo and Lautan is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hexindo Adiperkasa Tbk and Lautan Luas Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lautan Luas Tbk and Hexindo Adiperkasa 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 Hexindo Adiperkasa Tbk are associated (or correlated) with Lautan Luas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lautan Luas Tbk has no effect on the direction of Hexindo Adiperkasa i.e., Hexindo Adiperkasa and Lautan Luas go up and down completely randomly.
Pair Corralation between Hexindo Adiperkasa and Lautan Luas
Assuming the 90 days trading horizon Hexindo Adiperkasa Tbk is expected to generate 0.77 times more return on investment than Lautan Luas. However, Hexindo Adiperkasa Tbk is 1.3 times less risky than Lautan Luas. It trades about 0.01 of its potential returns per unit of risk. Lautan Luas Tbk is currently generating about -0.03 per unit of risk. If you would invest 477,373 in Hexindo Adiperkasa Tbk on August 28, 2024 and sell it today you would earn a total of 7,627 from holding Hexindo Adiperkasa Tbk or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hexindo Adiperkasa Tbk vs. Lautan Luas Tbk
Performance |
| Timeline |
| Hexindo Adiperkasa Tbk |
| Lautan Luas Tbk |
Hexindo Adiperkasa and Lautan Luas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hexindo Adiperkasa and Lautan Luas
The main advantage of trading using opposite Hexindo Adiperkasa and Lautan Luas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexindo Adiperkasa position performs unexpectedly, Lautan Luas 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 Lautan Luas will offset losses from the drop in Lautan Luas' long position.The idea behind Hexindo Adiperkasa Tbk and Lautan Luas Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lautan Luas vs. Kedaung Indah Can | Lautan Luas vs. Langgeng Makmur Industri | Lautan Luas vs. Kabelindo Murni Tbk | Lautan Luas vs. Mustika Ratu Tbk |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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