Correlation Between Langgeng Makmur and Bima Sakti
Can any of the company-specific risk be diversified away by investing in both Langgeng Makmur and Bima Sakti 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 Bima Sakti 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 Bima Sakti Pertiwi, you can compare the effects of market volatilities on Langgeng Makmur and Bima Sakti 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 Bima Sakti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Langgeng Makmur and Bima Sakti.
Diversification Opportunities for Langgeng Makmur and Bima Sakti
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Langgeng and Bima is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Langgeng Makmur Industri and Bima Sakti Pertiwi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bima Sakti Pertiwi 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 Bima Sakti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bima Sakti Pertiwi has no effect on the direction of Langgeng Makmur i.e., Langgeng Makmur and Bima Sakti go up and down completely randomly.
Pair Corralation between Langgeng Makmur and Bima Sakti
Assuming the 90 days trading horizon Langgeng Makmur Industri is expected to generate 0.98 times more return on investment than Bima Sakti. However, Langgeng Makmur Industri is 1.02 times less risky than Bima Sakti. It trades about 0.03 of its potential returns per unit of risk. Bima Sakti Pertiwi is currently generating about 0.01 per unit of risk. If you would invest 11,800 in Langgeng Makmur Industri on September 12, 2024 and sell it today you would earn a total of 3,900 from holding Langgeng Makmur Industri or generate 33.05% 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. Bima Sakti Pertiwi
Performance |
| Timeline |
| Langgeng Makmur Industri |
| Bima Sakti Pertiwi |
Langgeng Makmur and Bima Sakti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Langgeng Makmur and Bima Sakti
The main advantage of trading using opposite Langgeng Makmur and Bima Sakti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Langgeng Makmur position performs unexpectedly, Bima Sakti 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 Bima Sakti will offset losses from the drop in Bima Sakti'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 |
| Bima Sakti vs. Optima Prima Metal | Bima Sakti vs. Lion Metal Works | Bima Sakti vs. Lotte Chemical Titan | Bima Sakti vs. Humpuss Intermoda Transportasi |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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