Correlation Between Lippo Cikarang and Modernland Realty
Can any of the company-specific risk be diversified away by investing in both Lippo Cikarang and Modernland Realty 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 Modernland Realty 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 Modernland Realty Ltd, you can compare the effects of market volatilities on Lippo Cikarang and Modernland Realty 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 Modernland Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lippo Cikarang and Modernland Realty.
Diversification Opportunities for Lippo Cikarang and Modernland Realty
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lippo and Modernland is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lippo Cikarang Tbk and Modernland Realty Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modernland Realty 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 Modernland Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modernland Realty has no effect on the direction of Lippo Cikarang i.e., Lippo Cikarang and Modernland Realty go up and down completely randomly.
Pair Corralation between Lippo Cikarang and Modernland Realty
Assuming the 90 days trading horizon Lippo Cikarang Tbk is expected to generate 1.56 times more return on investment than Modernland Realty. However, Lippo Cikarang is 1.56 times more volatile than Modernland Realty Ltd. It trades about 0.03 of its potential returns per unit of risk. Modernland Realty Ltd is currently generating about 0.01 per unit of risk. If you would invest 61,500 in Lippo Cikarang Tbk on August 27, 2024 and sell it today you would earn a total of 4,000 from holding Lippo Cikarang Tbk or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lippo Cikarang Tbk vs. Modernland Realty Ltd
Performance |
| Timeline |
| Lippo Cikarang Tbk |
| Modernland Realty |
Lippo Cikarang and Modernland Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lippo Cikarang and Modernland Realty
The main advantage of trading using opposite Lippo Cikarang and Modernland Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lippo Cikarang position performs unexpectedly, Modernland Realty 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 Modernland Realty will offset losses from the drop in Modernland Realty'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 |
| Modernland Realty vs. Kawasan Industri Jababeka | Modernland Realty vs. Lippo Cikarang Tbk | Modernland Realty vs. Sentul City Tbk | Modernland Realty vs. Lippo Karawaci 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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