Correlation Between Victoria Insurance and Lippo General
Can any of the company-specific risk be diversified away by investing in both Victoria Insurance 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 Victoria Insurance and Lippo General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victoria Insurance Tbk and Lippo General Insurance, you can compare the effects of market volatilities on Victoria Insurance 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 Victoria Insurance with a short position of Lippo General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victoria Insurance and Lippo General.
Diversification Opportunities for Victoria Insurance and Lippo General
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Victoria and Lippo is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Victoria Insurance Tbk 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 Victoria Insurance 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 Victoria Insurance Tbk 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 Victoria Insurance i.e., Victoria Insurance and Lippo General go up and down completely randomly.
Pair Corralation between Victoria Insurance and Lippo General
Assuming the 90 days trading horizon Victoria Insurance Tbk is expected to under-perform the Lippo General. In addition to that, Victoria Insurance is 1.27 times more volatile than Lippo General Insurance. It trades about -0.02 of its total potential returns per unit of risk. Lippo General Insurance is currently generating about 0.02 per unit of volatility. If you would invest 30,156 in Lippo General Insurance on November 5, 2024 and sell it today you would earn a total of 1,244 from holding Lippo General Insurance or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Victoria Insurance Tbk vs. Lippo General Insurance
Performance |
| Timeline |
| Victoria Insurance Tbk |
| Lippo General Insurance |
Victoria Insurance and Lippo General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victoria Insurance and Lippo General
The main advantage of trading using opposite Victoria Insurance and Lippo General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victoria Insurance 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.| Victoria Insurance vs. Asuransi Dayin Mitra | Victoria Insurance vs. Asuransi Harta Aman | Victoria Insurance vs. Asuransi Bintang Tbk | Victoria Insurance vs. Asuransi Ramayana Tbk |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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