Correlation Between Japfa Comfeed and Langgeng Makmur
Can any of the company-specific risk be diversified away by investing in both Japfa Comfeed and Langgeng Makmur 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 Japfa Comfeed and Langgeng Makmur into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japfa Comfeed Indonesia and Langgeng Makmur Industri, you can compare the effects of market volatilities on Japfa Comfeed and Langgeng Makmur 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 Japfa Comfeed with a short position of Langgeng Makmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japfa Comfeed and Langgeng Makmur.
Diversification Opportunities for Japfa Comfeed and Langgeng Makmur
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Japfa and Langgeng is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Japfa Comfeed Indonesia and Langgeng Makmur Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Langgeng Makmur Industri and Japfa Comfeed 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 Japfa Comfeed Indonesia are associated (or correlated) with Langgeng Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Langgeng Makmur Industri has no effect on the direction of Japfa Comfeed i.e., Japfa Comfeed and Langgeng Makmur go up and down completely randomly.
Pair Corralation between Japfa Comfeed and Langgeng Makmur
Assuming the 90 days trading horizon Japfa Comfeed Indonesia is expected to generate 0.42 times more return on investment than Langgeng Makmur. However, Japfa Comfeed Indonesia is 2.38 times less risky than Langgeng Makmur. It trades about 0.1 of its potential returns per unit of risk. Langgeng Makmur Industri is currently generating about 0.04 per unit of risk. If you would invest 109,028 in Japfa Comfeed Indonesia on September 3, 2024 and sell it today you would earn a total of 62,472 from holding Japfa Comfeed Indonesia or generate 57.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japfa Comfeed Indonesia vs. Langgeng Makmur Industri
Performance |
| Timeline |
| Japfa Comfeed Indonesia |
| Langgeng Makmur Industri |
Japfa Comfeed and Langgeng Makmur Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japfa Comfeed and Langgeng Makmur
The main advantage of trading using opposite Japfa Comfeed and Langgeng Makmur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japfa Comfeed position performs unexpectedly, Langgeng Makmur 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 Langgeng Makmur will offset losses from the drop in Langgeng Makmur's long position.| Japfa Comfeed vs. Charoen Pokphand Indonesia | Japfa Comfeed vs. Kalbe Farma Tbk | Japfa Comfeed vs. Indofood Cbp Sukses | Japfa Comfeed vs. PT Indofood Sukses |
| Langgeng Makmur vs. Kedaung Indah Can | Langgeng Makmur vs. Kedawung Setia Industrial | Langgeng Makmur vs. Mustika Ratu Tbk | Langgeng Makmur vs. Pyridam Farma 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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