Correlation Between Langgeng Makmur and Sekar Laut
Can any of the company-specific risk be diversified away by investing in both Langgeng Makmur and Sekar Laut 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 Sekar Laut 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 Sekar Laut Tbk, you can compare the effects of market volatilities on Langgeng Makmur and Sekar Laut 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 Sekar Laut. Check out your portfolio center. Please also check ongoing floating volatility patterns of Langgeng Makmur and Sekar Laut.
Diversification Opportunities for Langgeng Makmur and Sekar Laut
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Langgeng and Sekar is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Langgeng Makmur Industri and Sekar Laut Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekar Laut 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 Sekar Laut. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekar Laut Tbk has no effect on the direction of Langgeng Makmur i.e., Langgeng Makmur and Sekar Laut go up and down completely randomly.
Pair Corralation between Langgeng Makmur and Sekar Laut
Assuming the 90 days trading horizon Langgeng Makmur is expected to generate 27.53 times less return on investment than Sekar Laut. But when comparing it to its historical volatility, Langgeng Makmur Industri is 12.24 times less risky than Sekar Laut. It trades about 0.02 of its potential returns per unit of risk. Sekar Laut Tbk is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 24,038 in Sekar Laut Tbk on August 31, 2024 and sell it today you would lose (4,538) from holding Sekar Laut Tbk or give up 18.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Langgeng Makmur Industri vs. Sekar Laut Tbk
Performance |
| Timeline |
| Langgeng Makmur Industri |
| Sekar Laut Tbk |
Langgeng Makmur and Sekar Laut Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Langgeng Makmur and Sekar Laut
The main advantage of trading using opposite Langgeng Makmur and Sekar Laut positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Langgeng Makmur position performs unexpectedly, Sekar Laut 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 Sekar Laut will offset losses from the drop in Sekar Laut'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 |
| Sekar Laut vs. Siantar Top Tbk | Sekar Laut vs. Prasidha Aneka Niaga | Sekar Laut vs. Mandom Indonesia Tbk | Sekar Laut vs. Pyridam Farma 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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