Correlation Between Lippo Cikarang and Bumi Serpong
Can any of the company-specific risk be diversified away by investing in both Lippo Cikarang and Bumi Serpong 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 Serpong 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 Serpong Damai, you can compare the effects of market volatilities on Lippo Cikarang and Bumi Serpong 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 Serpong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lippo Cikarang and Bumi Serpong.
Diversification Opportunities for Lippo Cikarang and Bumi Serpong
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lippo and Bumi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Lippo Cikarang Tbk and Bumi Serpong Damai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumi Serpong Damai 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 Serpong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumi Serpong Damai has no effect on the direction of Lippo Cikarang i.e., Lippo Cikarang and Bumi Serpong go up and down completely randomly.
Pair Corralation between Lippo Cikarang and Bumi Serpong
Assuming the 90 days trading horizon Lippo Cikarang Tbk is expected to generate 2.62 times more return on investment than Bumi Serpong. However, Lippo Cikarang is 2.62 times more volatile than Bumi Serpong Damai. It trades about 0.03 of its potential returns per unit of risk. Bumi Serpong Damai is currently generating about -0.23 per unit of risk. If you would invest 50,500 in Lippo Cikarang Tbk on November 29, 2024 and sell it today you would earn a total of 500.00 from holding Lippo Cikarang Tbk or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lippo Cikarang Tbk vs. Bumi Serpong Damai
Performance |
| Timeline |
| Lippo Cikarang Tbk |
| Bumi Serpong Damai |
Lippo Cikarang and Bumi Serpong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lippo Cikarang and Bumi Serpong
The main advantage of trading using opposite Lippo Cikarang and Bumi Serpong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lippo Cikarang position performs unexpectedly, Bumi Serpong 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 Serpong will offset losses from the drop in Bumi Serpong's long position.| Lippo Cikarang vs. Lippo Karawaci Tbk | Lippo Cikarang vs. Surya Semesta Internusa | Lippo Cikarang vs. Modernland Realty Ltd | Lippo Cikarang vs. Summarecon Agung Tbk |
| Bumi Serpong vs. Alam Sutera Realty | Bumi Serpong vs. Ciputra Development Tbk | Bumi Serpong vs. Summarecon Agung Tbk | Bumi Serpong vs. Pakuwon Jati 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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