Correlation Between Langgeng Makmur and Argha Karya
Can any of the company-specific risk be diversified away by investing in both Langgeng Makmur and Argha Karya 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 Langgeng Makmur and Argha Karya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Langgeng Makmur Industri and Argha Karya Prima, you can compare the effects of market volatilities on Langgeng Makmur and Argha Karya 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 Langgeng Makmur with a short position of Argha Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Langgeng Makmur and Argha Karya.
Diversification Opportunities for Langgeng Makmur and Argha Karya
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Langgeng and Argha is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Langgeng Makmur Industri and Argha Karya Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argha Karya Prima and Langgeng Makmur 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 Langgeng Makmur Industri are associated (or correlated) with Argha Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argha Karya Prima has no effect on the direction of Langgeng Makmur i.e., Langgeng Makmur and Argha Karya go up and down completely randomly.
Pair Corralation between Langgeng Makmur and Argha Karya
Assuming the 90 days trading horizon Langgeng Makmur Industri is expected to generate 6.16 times more return on investment than Argha Karya. However, Langgeng Makmur is 6.16 times more volatile than Argha Karya Prima. It trades about 0.17 of its potential returns per unit of risk. Argha Karya Prima is currently generating about -0.22 per unit of risk. If you would invest 11,500 in Langgeng Makmur Industri on August 31, 2024 and sell it today you would earn a total of 3,900 from holding Langgeng Makmur Industri or generate 33.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Langgeng Makmur Industri vs. Argha Karya Prima
Performance |
| Timeline |
| Langgeng Makmur Industri |
| Argha Karya Prima |
Langgeng Makmur and Argha Karya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Langgeng Makmur and Argha Karya
The main advantage of trading using opposite Langgeng Makmur and Argha Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Langgeng Makmur position performs unexpectedly, Argha Karya 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 Argha Karya will offset losses from the drop in Argha Karya's long position.| Langgeng Makmur vs. Kedaung Indah Can | Langgeng Makmur vs. Kedawung Setia Industrial | Langgeng Makmur vs. Mustika Ratu Tbk | Langgeng Makmur vs. Pyridam Farma Tbk |
| Argha Karya vs. Asiaplast Industries Tbk | Argha Karya vs. Alumindo Light Metal | Argha Karya vs. Berlina Tbk | Argha Karya vs. Anugerah Kagum Karya |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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