Correlation Between Langgeng Makmur and Saranacentral Bajatama
Can any of the company-specific risk be diversified away by investing in both Langgeng Makmur and Saranacentral Bajatama 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 Saranacentral Bajatama 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 Saranacentral Bajatama Tbk, you can compare the effects of market volatilities on Langgeng Makmur and Saranacentral Bajatama 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 Saranacentral Bajatama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Langgeng Makmur and Saranacentral Bajatama.
Diversification Opportunities for Langgeng Makmur and Saranacentral Bajatama
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Langgeng and Saranacentral is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Langgeng Makmur Industri and Saranacentral Bajatama Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saranacentral Bajatama 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 Saranacentral Bajatama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saranacentral Bajatama has no effect on the direction of Langgeng Makmur i.e., Langgeng Makmur and Saranacentral Bajatama go up and down completely randomly.
Pair Corralation between Langgeng Makmur and Saranacentral Bajatama
Assuming the 90 days trading horizon Langgeng Makmur Industri is expected to generate 1.27 times more return on investment than Saranacentral Bajatama. However, Langgeng Makmur is 1.27 times more volatile than Saranacentral Bajatama Tbk. It trades about 0.03 of its potential returns per unit of risk. Saranacentral Bajatama Tbk is currently generating about 0.0 per unit of risk. If you would invest 13,100 in Langgeng Makmur Industri on August 24, 2024 and sell it today you would earn a total of 5,100 from holding Langgeng Makmur Industri or generate 38.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Langgeng Makmur Industri vs. Saranacentral Bajatama Tbk
Performance |
| Timeline |
| Langgeng Makmur Industri |
| Saranacentral Bajatama |
Langgeng Makmur and Saranacentral Bajatama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Langgeng Makmur and Saranacentral Bajatama
The main advantage of trading using opposite Langgeng Makmur and Saranacentral Bajatama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Langgeng Makmur position performs unexpectedly, Saranacentral Bajatama 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 Saranacentral Bajatama will offset losses from the drop in Saranacentral Bajatama'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 |
| Saranacentral Bajatama vs. Kedaung Indah Can | Saranacentral Bajatama vs. Langgeng Makmur Industri | Saranacentral Bajatama vs. Kabelindo Murni Tbk | Saranacentral Bajatama 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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