Correlation Between Langgeng Makmur and Semen Baturaja
Can any of the company-specific risk be diversified away by investing in both Langgeng Makmur and Semen Baturaja 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 Semen Baturaja 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 Semen Baturaja Persero, you can compare the effects of market volatilities on Langgeng Makmur and Semen Baturaja 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 Semen Baturaja. Check out your portfolio center. Please also check ongoing floating volatility patterns of Langgeng Makmur and Semen Baturaja.
Diversification Opportunities for Langgeng Makmur and Semen Baturaja
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Langgeng and Semen is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Langgeng Makmur Industri and Semen Baturaja Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semen Baturaja Persero 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 Semen Baturaja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semen Baturaja Persero has no effect on the direction of Langgeng Makmur i.e., Langgeng Makmur and Semen Baturaja go up and down completely randomly.
Pair Corralation between Langgeng Makmur and Semen Baturaja
Assuming the 90 days trading horizon Langgeng Makmur Industri is expected to generate 1.86 times more return on investment than Semen Baturaja. However, Langgeng Makmur is 1.86 times more volatile than Semen Baturaja Persero. It trades about 0.03 of its potential returns per unit of risk. Semen Baturaja Persero 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 2,200 from holding Langgeng Makmur Industri or generate 17.32% 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. Semen Baturaja Persero
Performance |
| Timeline |
| Langgeng Makmur Industri |
| Semen Baturaja Persero |
Langgeng Makmur and Semen Baturaja Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Langgeng Makmur and Semen Baturaja
The main advantage of trading using opposite Langgeng Makmur and Semen Baturaja positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Langgeng Makmur position performs unexpectedly, Semen Baturaja 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 Semen Baturaja will offset losses from the drop in Semen Baturaja'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 |
| Semen Baturaja vs. Barito Pacific Tbk | Semen Baturaja vs. Charoen Pokphand Indonesia | Semen Baturaja vs. Indocement Tunggal Prakarsa |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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