Correlation Between Langgeng Makmur and Madusari Murni
Can any of the company-specific risk be diversified away by investing in both Langgeng Makmur and Madusari Murni 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 Madusari Murni 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 Madusari Murni Indah, you can compare the effects of market volatilities on Langgeng Makmur and Madusari Murni 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 Madusari Murni. Check out your portfolio center. Please also check ongoing floating volatility patterns of Langgeng Makmur and Madusari Murni.
Diversification Opportunities for Langgeng Makmur and Madusari Murni
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Langgeng and Madusari is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Langgeng Makmur Industri and Madusari Murni Indah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madusari Murni Indah 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 Madusari Murni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madusari Murni Indah has no effect on the direction of Langgeng Makmur i.e., Langgeng Makmur and Madusari Murni go up and down completely randomly.
Pair Corralation between Langgeng Makmur and Madusari Murni
Assuming the 90 days trading horizon Langgeng Makmur Industri is expected to generate 0.96 times more return on investment than Madusari Murni. However, Langgeng Makmur Industri is 1.04 times less risky than Madusari Murni. It trades about 0.03 of its potential returns per unit of risk. Madusari Murni Indah is currently generating about 0.01 per unit of risk. If you would invest 12,800 in Langgeng Makmur Industri on August 28, 2024 and sell it today you would earn a total of 4,200 from holding Langgeng Makmur Industri or generate 32.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Langgeng Makmur Industri vs. Madusari Murni Indah
Performance |
| Timeline |
| Langgeng Makmur Industri |
| Madusari Murni Indah |
Langgeng Makmur and Madusari Murni Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Langgeng Makmur and Madusari Murni
The main advantage of trading using opposite Langgeng Makmur and Madusari Murni positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Langgeng Makmur position performs unexpectedly, Madusari Murni 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 Madusari Murni will offset losses from the drop in Madusari Murni'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 |
| Madusari Murni vs. Kedaung Indah Can | Madusari Murni vs. Langgeng Makmur Industri | Madusari Murni vs. Kabelindo Murni Tbk | Madusari Murni 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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