Correlation Between Langgeng Makmur and Dana Brata

Can any of the company-specific risk be diversified away by investing in both Langgeng Makmur and Dana Brata 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 Dana Brata 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 Dana Brata Luhur, you can compare the effects of market volatilities on Langgeng Makmur and Dana Brata 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 Dana Brata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Langgeng Makmur and Dana Brata.

Diversification Opportunities for Langgeng Makmur and Dana Brata

-0.41

Correlation Coefficient

Langgeng Makmur  Dana Brata

Very good diversification

The 3 months correlation between Langgeng and Dana is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Langgeng Makmur Industri and Dana Brata Luhur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Brata Luhur 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 Dana Brata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Brata Luhur has no effect on the direction of Langgeng Makmur i.e., Langgeng Makmur and Dana Brata go up and down completely randomly.

Pair Corralation between Langgeng Makmur and Dana Brata

Assuming the 90 days trading horizon Langgeng Makmur is expected to generate 11.93 times less return on investment than Dana Brata. In addition to that, Langgeng Makmur is 1.39 times more volatile than Dana Brata Luhur. It trades about 0.0 of its total potential returns per unit of risk. Dana Brata Luhur is currently generating about 0.07 per unit of volatility. If you would invest  62,500  in Dana Brata Luhur on December 30, 2024 and sell it today you would earn a total of  9,000  from holding Dana Brata Luhur or generate 14.4% return on investment over 90 days.

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

Langgeng Makmur Industri  vs.  Dana Brata Luhur

Langgeng Makmur Industri

Risk-Adjusted Performance

Very Weak

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

Dana Brata Luhur

Risk-Adjusted Performance

Modest

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

Pair Trading with Langgeng Makmur and Dana Brata

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

The idea behind Langgeng Makmur Industri and Dana Brata Luhur 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 Directory module to find actively traded commodities issued by global exchanges.