Correlation Between Lautan Luas and Modern Internasional
Can any of the company-specific risk be diversified away by investing in both Lautan Luas and Modern Internasional 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 Modern Internasional 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 Modern Internasional Tbk, you can compare the effects of market volatilities on Lautan Luas and Modern Internasional 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 Modern Internasional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lautan Luas and Modern Internasional.
Diversification Opportunities for Lautan Luas and Modern Internasional
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lautan and Modern is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lautan Luas Tbk and Modern Internasional Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modern Internasional Tbk 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 Modern Internasional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modern Internasional Tbk has no effect on the direction of Lautan Luas i.e., Lautan Luas and Modern Internasional go up and down completely randomly.
Pair Corralation between Lautan Luas and Modern Internasional
Assuming the 90 days trading horizon Lautan Luas Tbk is expected to generate 0.18 times more return on investment than Modern Internasional. However, Lautan Luas Tbk is 5.42 times less risky than Modern Internasional. It trades about 0.0 of its potential returns per unit of risk. Modern Internasional Tbk is currently generating about -0.03 per unit of risk. If you would invest 105,248 in Lautan Luas Tbk on August 27, 2024 and sell it today you would lose (5,248) from holding Lautan Luas Tbk or give up 4.99% 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. Modern Internasional Tbk
Performance |
| Timeline |
| Lautan Luas Tbk |
| Modern Internasional Tbk |
Lautan Luas and Modern Internasional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lautan Luas and Modern Internasional
The main advantage of trading using opposite Lautan Luas and Modern Internasional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lautan Luas position performs unexpectedly, Modern Internasional 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 Modern Internasional will offset losses from the drop in Modern Internasional's long position.| Lautan Luas vs. Kedaung Indah Can | Lautan Luas vs. Langgeng Makmur Industri | Lautan Luas vs. Kabelindo Murni Tbk | Lautan Luas vs. Mustika Ratu Tbk |
| Modern Internasional vs. Astra Graphia Tbk | Modern Internasional vs. Hexindo Adiperkasa Tbk | Modern Internasional vs. Lautan Luas Tbk | Modern Internasional vs. Citra Marga Nusaphala |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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