Correlation Between Lippo Karawaci and Armidian Karyatama

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

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

Diversification Opportunities for Lippo Karawaci and Armidian Karyatama

0.0

Correlation Coefficient

Lippo Karawaci  Armidian Karyatama

Pay attention - limited upside

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

Pair Corralation between Lippo Karawaci and Armidian Karyatama

If you would invest  8,000  in Lippo Karawaci Tbk on September 3, 2024 and sell it today you would earn a total of  2,700  from holding Lippo Karawaci Tbk or generate 33.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Lippo Karawaci Tbk  vs.  Armidian Karyatama Tbk

Lippo Karawaci Tbk

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lippo Karawaci Tbk are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Lippo Karawaci disclosed solid returns over the last few months and may actually be approaching a breakup point.

Armidian Karyatama Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armidian Karyatama Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Armidian Karyatama 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 Lippo Karawaci and Armidian Karyatama

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

The idea behind Lippo Karawaci Tbk and Armidian Karyatama 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.