Correlation Between Langgeng Makmur and Darma Henwa
Can any of the company-specific risk be diversified away by investing in both Langgeng Makmur and Darma Henwa 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 Darma Henwa 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 Darma Henwa Tbk, you can compare the effects of market volatilities on Langgeng Makmur and Darma Henwa 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 Darma Henwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Langgeng Makmur and Darma Henwa.
Diversification Opportunities for Langgeng Makmur and Darma Henwa
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Langgeng and Darma is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Langgeng Makmur Industri and Darma Henwa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darma Henwa Tbk 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 Darma Henwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darma Henwa Tbk has no effect on the direction of Langgeng Makmur i.e., Langgeng Makmur and Darma Henwa go up and down completely randomly.
Pair Corralation between Langgeng Makmur and Darma Henwa
Assuming the 90 days trading horizon Langgeng Makmur is expected to generate 1.62 times less return on investment than Darma Henwa. In addition to that, Langgeng Makmur is 1.18 times more volatile than Darma Henwa Tbk. It trades about 0.03 of its total potential returns per unit of risk. Darma Henwa Tbk is currently generating about 0.06 per unit of volatility. If you would invest 5,500 in Darma Henwa Tbk on August 28, 2024 and sell it today you would earn a total of 6,200 from holding Darma Henwa Tbk or generate 112.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Langgeng Makmur Industri vs. Darma Henwa Tbk
Performance |
| Timeline |
| Langgeng Makmur Industri |
| Darma Henwa Tbk |
Langgeng Makmur and Darma Henwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Langgeng Makmur and Darma Henwa
The main advantage of trading using opposite Langgeng Makmur and Darma Henwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Langgeng Makmur position performs unexpectedly, Darma Henwa 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 Darma Henwa will offset losses from the drop in Darma Henwa'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 |
| Darma Henwa vs. Bakrieland Development Tbk | Darma Henwa vs. Energi Mega Persada | Darma Henwa vs. Bakrie Brothers Tbk | Darma Henwa vs. Bakrie Sumatera Plantations |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |