Correlation Between Kawasan Industri and Lautan Luas
Can any of the company-specific risk be diversified away by investing in both Kawasan Industri 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 Kawasan Industri and Lautan Luas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kawasan Industri Jababeka and Lautan Luas Tbk, you can compare the effects of market volatilities on Kawasan Industri 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 Kawasan Industri with a short position of Lautan Luas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawasan Industri and Lautan Luas.
Diversification Opportunities for Kawasan Industri and Lautan Luas
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kawasan and Lautan is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Kawasan Industri Jababeka 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 Kawasan Industri 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 Kawasan Industri Jababeka 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 Kawasan Industri i.e., Kawasan Industri and Lautan Luas go up and down completely randomly.
Pair Corralation between Kawasan Industri and Lautan Luas
Assuming the 90 days trading horizon Kawasan Industri Jababeka is expected to generate 2.03 times more return on investment than Lautan Luas. However, Kawasan Industri is 2.03 times more volatile than Lautan Luas Tbk. It trades about 0.03 of its potential returns per unit of risk. Lautan Luas Tbk is currently generating about -0.04 per unit of risk. If you would invest 19,400 in Kawasan Industri Jababeka on September 1, 2024 and sell it today you would earn a total of 100.00 from holding Kawasan Industri Jababeka or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kawasan Industri Jababeka vs. Lautan Luas Tbk
Performance |
| Timeline |
| Kawasan Industri Jababeka |
| Lautan Luas Tbk |
Kawasan Industri and Lautan Luas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kawasan Industri and Lautan Luas
The main advantage of trading using opposite Kawasan Industri and Lautan Luas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kawasan Industri 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.| Kawasan Industri vs. Bakrieland Development Tbk | Kawasan Industri vs. Ciputra Development Tbk | Kawasan Industri vs. Sentul City Tbk | Kawasan Industri vs. Solusi Bangun Indonesia |
| Lautan Luas vs. Lion Metal Works | Lautan Luas vs. PT Indofood Sukses | Lautan Luas vs. Cisarua Mountain Dairy | Lautan Luas vs. Indofood Cbp Sukses |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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