Correlation Between Trimegah Karya and Lippo General

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Can any of the company-specific risk be diversified away by investing in both Trimegah Karya 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 Trimegah Karya and Lippo General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trimegah Karya Pratama and Lippo General Insurance, you can compare the effects of market volatilities on Trimegah Karya 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 Trimegah Karya with a short position of Lippo General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trimegah Karya and Lippo General.

Diversification Opportunities for Trimegah Karya and Lippo General

-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Trimegah and Lippo is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Trimegah Karya Pratama 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 Trimegah Karya 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 Trimegah Karya Pratama 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 Trimegah Karya i.e., Trimegah Karya and Lippo General go up and down completely randomly.

Pair Corralation between Trimegah Karya and Lippo General

Assuming the 90 days trading horizon Trimegah Karya Pratama is expected to under-perform the Lippo General. But the stock apears to be less risky and, when comparing its historical volatility, Trimegah Karya Pratama is 11.97 times less risky than Lippo General. The stock trades about -0.01 of its potential returns per unit of risk. The Lippo General Insurance is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  57,029  in Lippo General Insurance on September 2, 2024 and sell it today you would lose (20,229) from holding Lippo General Insurance or give up 35.47% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.79%
ValuesDaily Returns

Trimegah Karya Pratama  vs.  Lippo General Insurance

 Performance 
       Timeline  
Trimegah Karya Pratama 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Trimegah Karya Pratama has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.
Lippo General Insurance 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Lippo General Insurance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Lippo General disclosed solid returns over the last few months and may actually be approaching a breakup point.

Trimegah Karya and Lippo General Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Trimegah Karya and Lippo General

The main advantage of trading using opposite Trimegah Karya and Lippo General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trimegah Karya 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.
The idea behind Trimegah Karya Pratama and Lippo General Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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