Correlation Between Lautan Luas and Pyridam Farma
Can any of the company-specific risk be diversified away by investing in both Lautan Luas and Pyridam Farma 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 Pyridam Farma 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 Pyridam Farma Tbk, you can compare the effects of market volatilities on Lautan Luas and Pyridam Farma 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 Pyridam Farma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lautan Luas and Pyridam Farma.
Diversification Opportunities for Lautan Luas and Pyridam Farma
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lautan and Pyridam is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lautan Luas Tbk and Pyridam Farma Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyridam Farma 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 Pyridam Farma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyridam Farma Tbk has no effect on the direction of Lautan Luas i.e., Lautan Luas and Pyridam Farma go up and down completely randomly.
Pair Corralation between Lautan Luas and Pyridam Farma
Assuming the 90 days trading horizon Lautan Luas is expected to generate 44.2 times less return on investment than Pyridam Farma. But when comparing it to its historical volatility, Lautan Luas Tbk is 4.69 times less risky than Pyridam Farma. It trades about 0.02 of its potential returns per unit of risk. Pyridam Farma Tbk is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 11,300 in Pyridam Farma Tbk on August 30, 2024 and sell it today you would earn a total of 15,100 from holding Pyridam Farma Tbk or generate 133.63% 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. Pyridam Farma Tbk
Performance |
| Timeline |
| Lautan Luas Tbk |
| Pyridam Farma Tbk |
Lautan Luas and Pyridam Farma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lautan Luas and Pyridam Farma
The main advantage of trading using opposite Lautan Luas and Pyridam Farma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lautan Luas position performs unexpectedly, Pyridam Farma 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 Pyridam Farma will offset losses from the drop in Pyridam Farma's long position.| Lautan Luas vs. Yelooo Integra Datanet | Lautan Luas vs. Indosterling Technomedia Tbk | Lautan Luas vs. Global Mediacom Tbk | Lautan Luas vs. Intermedia Capital Tbk |
| Pyridam Farma vs. Indofarma Tbk | Pyridam Farma vs. Merck Tbk | Pyridam Farma vs. Tempo Scan Pacific | Pyridam Farma vs. Mustika Ratu 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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