Correlation Between Lautan Luas and Citra Marga
Can any of the company-specific risk be diversified away by investing in both Lautan Luas and Citra Marga 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 Lautan Luas and Citra Marga into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lautan Luas Tbk and Citra Marga Nusaphala, you can compare the effects of market volatilities on Lautan Luas and Citra Marga 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 Lautan Luas with a short position of Citra Marga. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lautan Luas and Citra Marga.
Diversification Opportunities for Lautan Luas and Citra Marga
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lautan and Citra is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lautan Luas Tbk and Citra Marga Nusaphala in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citra Marga Nusaphala and Lautan Luas 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 Lautan Luas Tbk are associated (or correlated) with Citra Marga. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citra Marga Nusaphala has no effect on the direction of Lautan Luas i.e., Lautan Luas and Citra Marga go up and down completely randomly.
Pair Corralation between Lautan Luas and Citra Marga
Assuming the 90 days trading horizon Lautan Luas Tbk is expected to under-perform the Citra Marga. But the stock apears to be less risky and, when comparing its historical volatility, Lautan Luas Tbk is 1.05 times less risky than Citra Marga. The stock trades about -0.03 of its potential returns per unit of risk. The Citra Marga Nusaphala is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 179,000 in Citra Marga Nusaphala on August 24, 2024 and sell it today you would lose (37,500) from holding Citra Marga Nusaphala or give up 20.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lautan Luas Tbk vs. Citra Marga Nusaphala
Performance |
| Timeline |
| Lautan Luas Tbk |
| Citra Marga Nusaphala |
Lautan Luas and Citra Marga Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lautan Luas and Citra Marga
The main advantage of trading using opposite Lautan Luas and Citra Marga positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lautan Luas position performs unexpectedly, Citra Marga 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 Citra Marga will offset losses from the drop in Citra Marga's long position.| Lautan Luas vs. Yelooo Integra Datanet | Lautan Luas vs. Indosterling Technomedia Tbk | Lautan Luas vs. Dharma Polimetal Tbk | Lautan Luas vs. City Retail Developments |
| Citra Marga vs. Samudera Indonesia Tbk | Citra Marga vs. Steady Safe TBK | Citra Marga vs. Rukun Raharja Tbk | Citra Marga vs. PT Temas 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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