Correlation Between Lippo Karawaci and Metropolitan Land
Can any of the company-specific risk be diversified away by investing in both Lippo Karawaci and Metropolitan Land 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 Metropolitan Land 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 Metropolitan Land Tbk, you can compare the effects of market volatilities on Lippo Karawaci and Metropolitan Land 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 Metropolitan Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lippo Karawaci and Metropolitan Land.
Diversification Opportunities for Lippo Karawaci and Metropolitan Land
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lippo and Metropolitan is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lippo Karawaci Tbk and Metropolitan Land Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Land 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 Metropolitan Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Land Tbk has no effect on the direction of Lippo Karawaci i.e., Lippo Karawaci and Metropolitan Land go up and down completely randomly.
Pair Corralation between Lippo Karawaci and Metropolitan Land
Assuming the 90 days trading horizon Lippo Karawaci Tbk is expected to generate 2.14 times more return on investment than Metropolitan Land. However, Lippo Karawaci is 2.14 times more volatile than Metropolitan Land Tbk. It trades about 0.1 of its potential returns per unit of risk. Metropolitan Land Tbk is currently generating about 0.05 per unit of risk. If you would invest 7,100 in Lippo Karawaci Tbk on September 2, 2024 and sell it today you would earn a total of 3,600 from holding Lippo Karawaci Tbk or generate 50.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lippo Karawaci Tbk vs. Metropolitan Land Tbk
Performance |
| Timeline |
| Lippo Karawaci Tbk |
| Metropolitan Land Tbk |
Lippo Karawaci and Metropolitan Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lippo Karawaci and Metropolitan Land
The main advantage of trading using opposite Lippo Karawaci and Metropolitan Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lippo Karawaci position performs unexpectedly, Metropolitan Land 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 Metropolitan Land will offset losses from the drop in Metropolitan Land'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 |
| Metropolitan Land vs. Jaya Real Property | Metropolitan Land vs. Intiland Development Tbk | Metropolitan Land vs. Modernland Realty Ltd | Metropolitan Land vs. Lippo Cikarang 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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