Correlation Between Lippo Karawaci and Ristia Bintang
Can any of the company-specific risk be diversified away by investing in both Lippo Karawaci and Ristia Bintang 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 Ristia Bintang 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 Ristia Bintang Mahkotasejati, you can compare the effects of market volatilities on Lippo Karawaci and Ristia Bintang 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 Ristia Bintang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lippo Karawaci and Ristia Bintang.
Diversification Opportunities for Lippo Karawaci and Ristia Bintang
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lippo and Ristia is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lippo Karawaci Tbk and Ristia Bintang Mahkotasejati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ristia Bintang Mahko 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 Ristia Bintang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ristia Bintang Mahko has no effect on the direction of Lippo Karawaci i.e., Lippo Karawaci and Ristia Bintang go up and down completely randomly.
Pair Corralation between Lippo Karawaci and Ristia Bintang
Assuming the 90 days trading horizon Lippo Karawaci Tbk is expected to generate 1.59 times more return on investment than Ristia Bintang. However, Lippo Karawaci is 1.59 times more volatile than Ristia Bintang Mahkotasejati. It trades about 0.13 of its potential returns per unit of risk. Ristia Bintang Mahkotasejati is currently generating about 0.11 per unit of risk. If you would invest 8,200 in Lippo Karawaci Tbk on August 28, 2024 and sell it today you would earn a total of 2,800 from holding Lippo Karawaci Tbk or generate 34.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lippo Karawaci Tbk vs. Ristia Bintang Mahkotasejati
Performance |
| Timeline |
| Lippo Karawaci Tbk |
| Ristia Bintang Mahko |
Lippo Karawaci and Ristia Bintang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lippo Karawaci and Ristia Bintang
The main advantage of trading using opposite Lippo Karawaci and Ristia Bintang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lippo Karawaci position performs unexpectedly, Ristia Bintang 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 Ristia Bintang will offset losses from the drop in Ristia Bintang'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 |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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