Correlation Between Lipocine and PT Indofood

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

By analyzing existing cross correlation between Lipocine and PT Indofood Sukses, you can compare the effects of market volatilities on Lipocine and PT Indofood 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 Lipocine with a short position of PT Indofood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipocine and PT Indofood.

Diversification Opportunities for Lipocine and PT Indofood

0.0

Correlation Coefficient

Lipocine  PT Indofood

Pay attention - limited upside

The 3 months correlation between Lipocine and PIFMF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lipocine and PT Indofood Sukses in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indofood Sukses and Lipocine 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 Lipocine are associated (or correlated) with PT Indofood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indofood Sukses has no effect on the direction of Lipocine i.e., Lipocine and PT Indofood go up and down completely randomly.

Pair Corralation between Lipocine and PT Indofood

Given the investment horizon of 90 days Lipocine is expected to generate 3.41 times more return on investment than PT Indofood. However, Lipocine is 3.41 times more volatile than PT Indofood Sukses. It trades about 0.01 of its potential returns per unit of risk. PT Indofood Sukses is currently generating about -0.02 per unit of risk. If you would invest  835.00  in Lipocine on October 2, 2024 and sell it today you would lose (360.50) from holding Lipocine or give up 43.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	75.4%
Values	Daily Returns

Lipocine  vs.  PT Indofood Sukses

Lipocine

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Lipocine displayed solid returns over the last few months and may actually be approaching a breakup point.

PT Indofood Sukses

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Indofood Sukses has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, PT Indofood is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lipocine and PT Indofood

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

The idea behind Lipocine and PT Indofood Sukses 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.