Correlation Between Lippo Karawaci and City Retail
Can any of the company-specific risk be diversified away by investing in both Lippo Karawaci and City Retail 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 City Retail 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 City Retail Developments, you can compare the effects of market volatilities on Lippo Karawaci and City Retail 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 City Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lippo Karawaci and City Retail.
Diversification Opportunities for Lippo Karawaci and City Retail
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lippo and City is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lippo Karawaci Tbk and City Retail Developments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Retail Developments 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 City Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Retail Developments has no effect on the direction of Lippo Karawaci i.e., Lippo Karawaci and City Retail go up and down completely randomly.
Pair Corralation between Lippo Karawaci and City Retail
Assuming the 90 days trading horizon Lippo Karawaci Tbk is expected to generate 5.32 times more return on investment than City Retail. However, Lippo Karawaci is 5.32 times more volatile than City Retail Developments. It trades about 0.04 of its potential returns per unit of risk. City Retail Developments is currently generating about -0.1 per unit of risk. If you would invest 10,400 in Lippo Karawaci Tbk on September 3, 2024 and sell it today you would earn a total of 300.00 from holding Lippo Karawaci Tbk or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lippo Karawaci Tbk vs. City Retail Developments
Performance |
| Timeline |
| Lippo Karawaci Tbk |
| City Retail Developments |
Lippo Karawaci and City Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lippo Karawaci and City Retail
The main advantage of trading using opposite Lippo Karawaci and City Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lippo Karawaci position performs unexpectedly, City Retail 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 City Retail will offset losses from the drop in City Retail'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 |
| City Retail vs. Mitra Pinasthika Mustika | City Retail vs. Jakarta Int Hotels | City Retail vs. Asuransi Harta Aman | City Retail vs. Indosterling Technomedia 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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