Correlation Between Lippo General and Maskapai Reasuransi
Can any of the company-specific risk be diversified away by investing in both Lippo General and Maskapai Reasuransi 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 Maskapai Reasuransi 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 Maskapai Reasuransi Indonesia, you can compare the effects of market volatilities on Lippo General and Maskapai Reasuransi 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 Maskapai Reasuransi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lippo General and Maskapai Reasuransi.
Diversification Opportunities for Lippo General and Maskapai Reasuransi
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lippo and Maskapai is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lippo General Insurance and Maskapai Reasuransi Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maskapai Reasuransi 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 Maskapai Reasuransi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maskapai Reasuransi has no effect on the direction of Lippo General i.e., Lippo General and Maskapai Reasuransi go up and down completely randomly.
Pair Corralation between Lippo General and Maskapai Reasuransi
Assuming the 90 days trading horizon Lippo General Insurance is expected to generate 1.61 times more return on investment than Maskapai Reasuransi. However, Lippo General is 1.61 times more volatile than Maskapai Reasuransi Indonesia. It trades about 0.15 of its potential returns per unit of risk. Maskapai Reasuransi Indonesia is currently generating about -0.1 per unit of risk. If you would invest 35,000 in Lippo General Insurance on August 27, 2024 and sell it today you would earn a total of 1,600 from holding Lippo General Insurance or generate 4.57% 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. Maskapai Reasuransi Indonesia
Performance |
| Timeline |
| Lippo General Insurance |
| Maskapai Reasuransi |
Lippo General and Maskapai Reasuransi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lippo General and Maskapai Reasuransi
The main advantage of trading using opposite Lippo General and Maskapai Reasuransi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lippo General position performs unexpectedly, Maskapai Reasuransi 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 Maskapai Reasuransi will offset losses from the drop in Maskapai Reasuransi'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 |
| Maskapai Reasuransi vs. Lippo General Insurance | Maskapai Reasuransi vs. Paninvest Tbk | Maskapai Reasuransi vs. Mandala Multifinance Tbk | Maskapai Reasuransi vs. Bank Mayapada Internasional |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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