Correlation Between Lautan Luas and Royal Prima
Can any of the company-specific risk be diversified away by investing in both Lautan Luas and Royal Prima 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 Royal Prima 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 Royal Prima PT, you can compare the effects of market volatilities on Lautan Luas and Royal Prima 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 Royal Prima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lautan Luas and Royal Prima.
Diversification Opportunities for Lautan Luas and Royal Prima
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lautan and Royal is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lautan Luas Tbk and Royal Prima PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Prima PT 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 Royal Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Prima PT has no effect on the direction of Lautan Luas i.e., Lautan Luas and Royal Prima go up and down completely randomly.
Pair Corralation between Lautan Luas and Royal Prima
Assuming the 90 days trading horizon Lautan Luas Tbk is expected to generate 0.29 times more return on investment than Royal Prima. However, Lautan Luas Tbk is 3.5 times less risky than Royal Prima. It trades about 0.01 of its potential returns per unit of risk. Royal Prima PT is currently generating about 0.0 per unit of risk. If you would invest 100,000 in Lautan Luas Tbk on August 28, 2024 and sell it today you would earn a total of 500.00 from holding Lautan Luas Tbk or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lautan Luas Tbk vs. Royal Prima PT
Performance |
| Timeline |
| Lautan Luas Tbk |
| Royal Prima PT |
Lautan Luas and Royal Prima Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lautan Luas and Royal Prima
The main advantage of trading using opposite Lautan Luas and Royal Prima positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lautan Luas position performs unexpectedly, Royal Prima 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 Royal Prima will offset losses from the drop in Royal Prima'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 |
| Royal Prima vs. Astra Graphia Tbk | Royal Prima vs. Hexindo Adiperkasa Tbk | Royal Prima vs. Lautan Luas Tbk | Royal Prima 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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