Correlation Between Lippo Karawaci and Merck Tbk
Can any of the company-specific risk be diversified away by investing in both Lippo Karawaci and Merck Tbk 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 Karawaci and Merck Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lippo Karawaci Tbk and Merck Tbk, you can compare the effects of market volatilities on Lippo Karawaci and Merck Tbk 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 Karawaci with a short position of Merck Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lippo Karawaci and Merck Tbk.
Diversification Opportunities for Lippo Karawaci and Merck Tbk
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lippo and Merck is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lippo Karawaci Tbk and Merck Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Tbk and Lippo Karawaci 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 Karawaci Tbk are associated (or correlated) with Merck Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck Tbk has no effect on the direction of Lippo Karawaci i.e., Lippo Karawaci and Merck Tbk go up and down completely randomly.
Pair Corralation between Lippo Karawaci and Merck Tbk
Assuming the 90 days trading horizon Lippo Karawaci Tbk is expected to generate 3.13 times more return on investment than Merck Tbk. However, Lippo Karawaci is 3.13 times more volatile than Merck Tbk. It trades about -0.06 of its potential returns per unit of risk. Merck Tbk is currently generating about -0.42 per unit of risk. If you would invest 11,100 in Lippo Karawaci Tbk on September 3, 2024 and sell it today you would lose (500.00) from holding Lippo Karawaci Tbk or give up 4.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lippo Karawaci Tbk vs. Merck Tbk
Performance |
| Timeline |
| Lippo Karawaci Tbk |
| Merck Tbk |
Lippo Karawaci and Merck Tbk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lippo Karawaci and Merck Tbk
The main advantage of trading using opposite Lippo Karawaci and Merck Tbk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lippo Karawaci position performs unexpectedly, Merck Tbk 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 Merck Tbk will offset losses from the drop in Merck Tbk's long position.| Lippo Karawaci vs. Bumi Serpong Damai | Lippo Karawaci vs. Alam Sutera Realty | Lippo Karawaci vs. Summarecon Agung Tbk | Lippo Karawaci vs. Ciputra Development Tbk |
| Merck Tbk vs. Darya Varia Laboratoria Tbk | Merck Tbk vs. Tempo Scan Pacific | Merck Tbk vs. Pyridam Farma Tbk | Merck Tbk vs. Multi Bintang Indonesia |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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