Correlation Between Imago Mulia and Lancartama Sejati

Can any of the company-specific risk be diversified away by investing in both Imago Mulia and Lancartama Sejati 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 Imago Mulia and Lancartama Sejati into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Imago Mulia Persada and Lancartama Sejati Tbk, you can compare the effects of market volatilities on Imago Mulia and Lancartama Sejati 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 Imago Mulia with a short position of Lancartama Sejati. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imago Mulia and Lancartama Sejati.

Diversification Opportunities for Imago Mulia and Lancartama Sejati

-0.45

Correlation Coefficient

Imago Mulia  Lancartama Sejati

Very good diversification

The 3 months correlation between Imago and Lancartama is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Imago Mulia Persada and Lancartama Sejati Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lancartama Sejati Tbk and Imago Mulia 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 Imago Mulia Persada are associated (or correlated) with Lancartama Sejati. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lancartama Sejati Tbk has no effect on the direction of Imago Mulia i.e., Imago Mulia and Lancartama Sejati go up and down completely randomly.

Pair Corralation between Imago Mulia and Lancartama Sejati

Assuming the 90 days trading horizon Imago Mulia is expected to generate 1.11 times less return on investment than Lancartama Sejati. But when comparing it to its historical volatility, Imago Mulia Persada is 1.03 times less risky than Lancartama Sejati. It trades about 0.07 of its potential returns per unit of risk. Lancartama Sejati Tbk is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,300  in Lancartama Sejati Tbk on October 9, 2024 and sell it today you would earn a total of  200.00  from holding Lancartama Sejati Tbk or generate 15.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Imago Mulia Persada  vs.  Lancartama Sejati Tbk

Imago Mulia Persada

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Imago Mulia Persada are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Imago Mulia disclosed solid returns over the last few months and may actually be approaching a breakup point.

Lancartama Sejati Tbk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lancartama Sejati Tbk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Lancartama Sejati disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Imago Mulia and Lancartama Sejati

The main advantage of trading using opposite Imago Mulia and Lancartama Sejati positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imago Mulia position performs unexpectedly, Lancartama Sejati 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 Lancartama Sejati will offset losses from the drop in Lancartama Sejati's long position.

The idea behind Imago Mulia Persada and Lancartama Sejati Tbk 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.