Correlation Between Mustika Ratu and Lautan Luas
Can any of the company-specific risk be diversified away by investing in both Mustika Ratu and Lautan Luas 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 Mustika Ratu and Lautan Luas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mustika Ratu Tbk and Lautan Luas Tbk, you can compare the effects of market volatilities on Mustika Ratu and Lautan Luas 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 Mustika Ratu with a short position of Lautan Luas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mustika Ratu and Lautan Luas.
Diversification Opportunities for Mustika Ratu and Lautan Luas
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mustika and Lautan is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Mustika Ratu Tbk and Lautan Luas Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lautan Luas Tbk and Mustika Ratu 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 Mustika Ratu Tbk are associated (or correlated) with Lautan Luas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lautan Luas Tbk has no effect on the direction of Mustika Ratu i.e., Mustika Ratu and Lautan Luas go up and down completely randomly.
Pair Corralation between Mustika Ratu and Lautan Luas
Assuming the 90 days trading horizon Mustika Ratu Tbk is expected to under-perform the Lautan Luas. In addition to that, Mustika Ratu is 2.44 times more volatile than Lautan Luas Tbk. It trades about -0.28 of its total potential returns per unit of risk. Lautan Luas Tbk is currently generating about -0.01 per unit of volatility. If you would invest 100,500 in Lautan Luas Tbk on August 30, 2024 and sell it today you would lose (500.00) from holding Lautan Luas Tbk or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mustika Ratu Tbk vs. Lautan Luas Tbk
Performance |
| Timeline |
| Mustika Ratu Tbk |
| Lautan Luas Tbk |
Mustika Ratu and Lautan Luas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mustika Ratu and Lautan Luas
The main advantage of trading using opposite Mustika Ratu and Lautan Luas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mustika Ratu position performs unexpectedly, Lautan Luas 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 Lautan Luas will offset losses from the drop in Lautan Luas' long position.| Mustika Ratu vs. Pyridam Farma Tbk | Mustika Ratu vs. Mandom Indonesia Tbk | Mustika Ratu vs. Langgeng Makmur Industri | Mustika Ratu vs. Merck Tbk |
| Lautan Luas vs. Yelooo Integra Datanet | Lautan Luas vs. Indosterling Technomedia Tbk | Lautan Luas vs. Global Mediacom Tbk | Lautan Luas vs. Intermedia Capital 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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