Correlation Between Media Nusantara and Lippo General
Can any of the company-specific risk be diversified away by investing in both Media Nusantara and Lippo General 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 Media Nusantara and Lippo General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Media Nusantara Citra and Lippo General Insurance, you can compare the effects of market volatilities on Media Nusantara and Lippo General 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 Media Nusantara with a short position of Lippo General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media Nusantara and Lippo General.
Diversification Opportunities for Media Nusantara and Lippo General
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Media and Lippo is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Media Nusantara Citra and Lippo General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lippo General Insurance and Media Nusantara 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 Media Nusantara Citra are associated (or correlated) with Lippo General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lippo General Insurance has no effect on the direction of Media Nusantara i.e., Media Nusantara and Lippo General go up and down completely randomly.
Pair Corralation between Media Nusantara and Lippo General
Assuming the 90 days trading horizon Media Nusantara Citra is expected to under-perform the Lippo General. In addition to that, Media Nusantara is 4.54 times more volatile than Lippo General Insurance. It trades about -0.11 of its total potential returns per unit of risk. Lippo General Insurance is currently generating about -0.38 per unit of volatility. If you would invest 32,200 in Lippo General Insurance on November 3, 2024 and sell it today you would lose (800.00) from holding Lippo General Insurance or give up 2.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Media Nusantara Citra vs. Lippo General Insurance
Performance |
| Timeline |
| Media Nusantara Citra |
| Lippo General Insurance |
Media Nusantara and Lippo General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Media Nusantara and Lippo General
The main advantage of trading using opposite Media Nusantara and Lippo General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media Nusantara position performs unexpectedly, Lippo General 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 Lippo General will offset losses from the drop in Lippo General's long position.| Media Nusantara vs. Global Mediacom Tbk | Media Nusantara vs. Surya Citra Media | Media Nusantara vs. Akr Corporindo Tbk | Media Nusantara vs. Bumi Serpong Damai |
| Lippo General vs. Maskapai Reasuransi Indonesia | Lippo General vs. Lenox Pasifik Investama | Lippo General vs. Paninvest Tbk | Lippo General vs. Bank Mayapada Internasional |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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