Correlation Between Lippo General and PT Homeco
Can any of the company-specific risk be diversified away by investing in both Lippo General and PT Homeco 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 General and PT Homeco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lippo General Insurance and PT Homeco Victoria, you can compare the effects of market volatilities on Lippo General and PT Homeco 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 General with a short position of PT Homeco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lippo General and PT Homeco.
Diversification Opportunities for Lippo General and PT Homeco
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lippo and LIVE is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lippo General Insurance and PT Homeco Victoria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Homeco Victoria and Lippo General 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 General Insurance are associated (or correlated) with PT Homeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Homeco Victoria has no effect on the direction of Lippo General i.e., Lippo General and PT Homeco go up and down completely randomly.
Pair Corralation between Lippo General and PT Homeco
Assuming the 90 days trading horizon Lippo General Insurance is expected to generate 0.4 times more return on investment than PT Homeco. However, Lippo General Insurance is 2.52 times less risky than PT Homeco. It trades about 0.17 of its potential returns per unit of risk. PT Homeco Victoria is currently generating about -0.26 per unit of risk. If you would invest 35,400 in Lippo General Insurance on September 2, 2024 and sell it today you would earn a total of 1,400 from holding Lippo General Insurance or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lippo General Insurance vs. PT Homeco Victoria
Performance |
| Timeline |
| Lippo General Insurance |
| PT Homeco Victoria |
Lippo General and PT Homeco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lippo General and PT Homeco
The main advantage of trading using opposite Lippo General and PT Homeco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lippo General position performs unexpectedly, PT Homeco 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 PT Homeco will offset losses from the drop in PT Homeco's long position.| Lippo General vs. Maskapai Reasuransi Indonesia | Lippo General vs. Lenox Pasifik Investama | Lippo General vs. Paninvest Tbk | Lippo General vs. Bank Mayapada Internasional |
| PT Homeco vs. Surya Citra Media | PT Homeco vs. Ciptadana Asset Management | PT Homeco vs. Smartfren Telecom Tbk | PT Homeco vs. Indointernet Tbk PT |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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