Correlation Between Langgeng Makmur and Indal Aluminium
Can any of the company-specific risk be diversified away by investing in both Langgeng Makmur and Indal Aluminium 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 Indal Aluminium 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 Indal Aluminium Industry, you can compare the effects of market volatilities on Langgeng Makmur and Indal Aluminium 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 Indal Aluminium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Langgeng Makmur and Indal Aluminium.
Diversification Opportunities for Langgeng Makmur and Indal Aluminium
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Langgeng and Indal is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Langgeng Makmur Industri and Indal Aluminium Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indal Aluminium Industry 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 Indal Aluminium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indal Aluminium Industry has no effect on the direction of Langgeng Makmur i.e., Langgeng Makmur and Indal Aluminium go up and down completely randomly.
Pair Corralation between Langgeng Makmur and Indal Aluminium
Assuming the 90 days trading horizon Langgeng Makmur Industri is expected to generate 1.49 times more return on investment than Indal Aluminium. However, Langgeng Makmur is 1.49 times more volatile than Indal Aluminium Industry. It trades about 0.03 of its potential returns per unit of risk. Indal Aluminium Industry is currently generating about -0.04 per unit of risk. If you would invest 12,700 in Langgeng Makmur Industri on August 30, 2024 and sell it today you would earn a total of 2,700 from holding Langgeng Makmur Industri or generate 21.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Langgeng Makmur Industri vs. Indal Aluminium Industry
Performance |
| Timeline |
| Langgeng Makmur Industri |
| Indal Aluminium Industry |
Langgeng Makmur and Indal Aluminium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Langgeng Makmur and Indal Aluminium
The main advantage of trading using opposite Langgeng Makmur and Indal Aluminium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Langgeng Makmur position performs unexpectedly, Indal Aluminium 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 Indal Aluminium will offset losses from the drop in Indal Aluminium'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 |
| Indal Aluminium vs. Intanwijaya Internasional Tbk | Indal Aluminium vs. Alumindo Light Metal | Indal Aluminium vs. Champion Pacific Indonesia | Indal Aluminium vs. Betonjaya Manunggal 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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