Correlation Between Siloam International and Lautan Luas
Can any of the company-specific risk be diversified away by investing in both Siloam International 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 Siloam International and Lautan Luas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siloam International Hospitals and Lautan Luas Tbk, you can compare the effects of market volatilities on Siloam International 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 Siloam International with a short position of Lautan Luas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siloam International and Lautan Luas.
Diversification Opportunities for Siloam International and Lautan Luas
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Siloam and Lautan is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Siloam International Hospitals 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 Siloam International 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 Siloam International Hospitals 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 Siloam International i.e., Siloam International and Lautan Luas go up and down completely randomly.
Pair Corralation between Siloam International and Lautan Luas
Assuming the 90 days trading horizon Siloam International Hospitals is expected to generate 2.89 times more return on investment than Lautan Luas. However, Siloam International is 2.89 times more volatile than Lautan Luas Tbk. It trades about 0.07 of its potential returns per unit of risk. Lautan Luas Tbk is currently generating about 0.01 per unit of risk. If you would invest 240,102 in Siloam International Hospitals on August 29, 2024 and sell it today you would earn a total of 61,898 from holding Siloam International Hospitals or generate 25.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Siloam International Hospitals vs. Lautan Luas Tbk
Performance |
| Timeline |
| Siloam International |
| Lautan Luas Tbk |
Siloam International and Lautan Luas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siloam International and Lautan Luas
The main advantage of trading using opposite Siloam International and Lautan Luas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siloam International 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.| Siloam International vs. Mitra Keluarga Karyasehat | Siloam International vs. Matahari Department Store | Siloam International vs. Surya Citra Media | Siloam International vs. Sawit Sumbermas Sarana |
| Lautan Luas vs. Dharma Polimetal Tbk | Lautan Luas vs. Alumindo Light Metal | Lautan Luas vs. Communication Cable Systems | Lautan Luas vs. Tridomain Performance Materials |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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