Correlation Between Unilever Indonesia and Lini Imaji
Can any of the company-specific risk be diversified away by investing in both Unilever Indonesia and Lini Imaji 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 Unilever Indonesia and Lini Imaji into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever Indonesia Tbk and Lini Imaji Kreasi, you can compare the effects of market volatilities on Unilever Indonesia and Lini Imaji 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 Unilever Indonesia with a short position of Lini Imaji. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever Indonesia and Lini Imaji.
Diversification Opportunities for Unilever Indonesia and Lini Imaji
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Unilever and Lini is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Unilever Indonesia Tbk and Lini Imaji Kreasi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lini Imaji Kreasi and Unilever Indonesia 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 Unilever Indonesia Tbk are associated (or correlated) with Lini Imaji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lini Imaji Kreasi has no effect on the direction of Unilever Indonesia i.e., Unilever Indonesia and Lini Imaji go up and down completely randomly.
Pair Corralation between Unilever Indonesia and Lini Imaji
Assuming the 90 days trading horizon Unilever Indonesia Tbk is expected to under-perform the Lini Imaji. But the stock apears to be less risky and, when comparing its historical volatility, Unilever Indonesia Tbk is 2.42 times less risky than Lini Imaji. The stock trades about -0.08 of its potential returns per unit of risk. The Lini Imaji Kreasi is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,000 in Lini Imaji Kreasi on September 3, 2024 and sell it today you would earn a total of 8,500 from holding Lini Imaji Kreasi or generate 170.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever Indonesia Tbk vs. Lini Imaji Kreasi
Performance |
| Timeline |
| Unilever Indonesia Tbk |
| Lini Imaji Kreasi |
Unilever Indonesia and Lini Imaji Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever Indonesia and Lini Imaji
The main advantage of trading using opposite Unilever Indonesia and Lini Imaji positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever Indonesia position performs unexpectedly, Lini Imaji 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 Lini Imaji will offset losses from the drop in Lini Imaji's long position.| Unilever Indonesia vs. PT Indofood Sukses | Unilever Indonesia vs. Astra International Tbk | Unilever Indonesia vs. Telkom Indonesia Tbk | Unilever Indonesia vs. Bank Central Asia |
| Lini Imaji vs. Global Mediacom Tbk | Lini Imaji vs. Hero Supermarket Tbk | Lini Imaji vs. Diamond Food Indonesia | Lini Imaji vs. Capital Financial Indonesia |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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