Correlation Between Lippo Cikarang and Trimitra Propertindo
Can any of the company-specific risk be diversified away by investing in both Lippo Cikarang and Trimitra Propertindo 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 Trimitra Propertindo 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 Trimitra Propertindo Tbk, you can compare the effects of market volatilities on Lippo Cikarang and Trimitra Propertindo 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 Trimitra Propertindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lippo Cikarang and Trimitra Propertindo.
Diversification Opportunities for Lippo Cikarang and Trimitra Propertindo
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lippo and Trimitra is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lippo Cikarang Tbk and Trimitra Propertindo Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimitra Propertindo Tbk 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 Trimitra Propertindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimitra Propertindo Tbk has no effect on the direction of Lippo Cikarang i.e., Lippo Cikarang and Trimitra Propertindo go up and down completely randomly.
Pair Corralation between Lippo Cikarang and Trimitra Propertindo
Assuming the 90 days trading horizon Lippo Cikarang Tbk is expected to generate 0.82 times more return on investment than Trimitra Propertindo. However, Lippo Cikarang Tbk is 1.23 times less risky than Trimitra Propertindo. It trades about -0.1 of its potential returns per unit of risk. Trimitra Propertindo Tbk is currently generating about -0.15 per unit of risk. If you would invest 74,500 in Lippo Cikarang Tbk on September 2, 2024 and sell it today you would lose (14,000) from holding Lippo Cikarang Tbk or give up 18.79% 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. Trimitra Propertindo Tbk
Performance |
| Timeline |
| Lippo Cikarang Tbk |
| Trimitra Propertindo Tbk |
Lippo Cikarang and Trimitra Propertindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lippo Cikarang and Trimitra Propertindo
The main advantage of trading using opposite Lippo Cikarang and Trimitra Propertindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lippo Cikarang position performs unexpectedly, Trimitra Propertindo 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 Trimitra Propertindo will offset losses from the drop in Trimitra Propertindo'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 |
| Trimitra Propertindo vs. Lippo Cikarang Tbk | Trimitra Propertindo vs. Lippo Karawaci Tbk | Trimitra Propertindo vs. Mitra Pinasthika Mustika | Trimitra Propertindo 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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