Correlation Between Langgeng Makmur and Citatah Tbk

Can any of the company-specific risk be diversified away by investing in both Langgeng Makmur and Citatah Tbk 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 Langgeng Makmur and Citatah Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Langgeng Makmur Industri and Citatah Tbk, you can compare the effects of market volatilities on Langgeng Makmur and Citatah Tbk 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 Langgeng Makmur with a short position of Citatah Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Langgeng Makmur and Citatah Tbk.

Diversification Opportunities for Langgeng Makmur and Citatah Tbk

-0.39

Correlation Coefficient

Langgeng Makmur  Citatah Tbk

Very good diversification

The 3 months correlation between Langgeng and Citatah is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Langgeng Makmur Industri and Citatah Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citatah Tbk and Langgeng Makmur 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 Langgeng Makmur Industri are associated (or correlated) with Citatah Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citatah Tbk has no effect on the direction of Langgeng Makmur i.e., Langgeng Makmur and Citatah Tbk go up and down completely randomly.

Pair Corralation between Langgeng Makmur and Citatah Tbk

Assuming the 90 days trading horizon Langgeng Makmur Industri is expected to under-perform the Citatah Tbk. In addition to that, Langgeng Makmur is 1.83 times more volatile than Citatah Tbk. It trades about -0.22 of its total potential returns per unit of risk. Citatah Tbk is currently generating about 0.09 per unit of volatility. If you would invest  2,500  in Citatah Tbk on October 10, 2024 and sell it today you would earn a total of  100.00  from holding Citatah Tbk or generate 4.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Langgeng Makmur Industri  vs.  Citatah Tbk

Langgeng Makmur Industri

Risk-Adjusted Performance

4 of 100

Insignificant

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

Citatah Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citatah Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Citatah Tbk is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Langgeng Makmur and Citatah Tbk

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

The idea behind Langgeng Makmur Industri and Citatah 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.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.