Correlation Between Lippo Cikarang and Bumi Citra
Can any of the company-specific risk be diversified away by investing in both Lippo Cikarang and Bumi Citra 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 Lippo Cikarang and Bumi Citra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lippo Cikarang Tbk and Bumi Citra Permai, you can compare the effects of market volatilities on Lippo Cikarang and Bumi Citra 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 Lippo Cikarang with a short position of Bumi Citra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lippo Cikarang and Bumi Citra.
Diversification Opportunities for Lippo Cikarang and Bumi Citra
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lippo and Bumi is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lippo Cikarang Tbk and Bumi Citra Permai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumi Citra Permai and Lippo Cikarang 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 Lippo Cikarang Tbk are associated (or correlated) with Bumi Citra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumi Citra Permai has no effect on the direction of Lippo Cikarang i.e., Lippo Cikarang and Bumi Citra go up and down completely randomly.
Pair Corralation between Lippo Cikarang and Bumi Citra
Assuming the 90 days trading horizon Lippo Cikarang Tbk is expected to under-perform the Bumi Citra. In addition to that, Lippo Cikarang is 1.06 times more volatile than Bumi Citra Permai. It trades about -0.02 of its total potential returns per unit of risk. Bumi Citra Permai is currently generating about 0.0 per unit of volatility. If you would invest 6,200 in Bumi Citra Permai on September 2, 2024 and sell it today you would lose (500.00) from holding Bumi Citra Permai or give up 8.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lippo Cikarang Tbk vs. Bumi Citra Permai
Performance |
| Timeline |
| Lippo Cikarang Tbk |
| Bumi Citra Permai |
Lippo Cikarang and Bumi Citra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lippo Cikarang and Bumi Citra
The main advantage of trading using opposite Lippo Cikarang and Bumi Citra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lippo Cikarang position performs unexpectedly, Bumi Citra 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 Bumi Citra will offset losses from the drop in Bumi Citra's long position.| Lippo Cikarang vs. Lippo Karawaci Tbk | Lippo Cikarang vs. Mitra Pinasthika Mustika | Lippo Cikarang vs. Jakarta Int Hotels | Lippo Cikarang vs. Indosterling Technomedia Tbk |
| Bumi Citra vs. Lippo Cikarang Tbk | Bumi Citra vs. Lippo Karawaci Tbk | Bumi Citra vs. Mitra Pinasthika Mustika | Bumi Citra vs. Jakarta Int Hotels |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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