Correlation Between Lippo Karawaci and Mnc Investama

Can any of the company-specific risk be diversified away by investing in both Lippo Karawaci and Mnc Investama 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 Mnc Investama 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 Mnc Investama Tbk, you can compare the effects of market volatilities on Lippo Karawaci and Mnc Investama 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 Mnc Investama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lippo Karawaci and Mnc Investama.

Diversification Opportunities for Lippo Karawaci and Mnc Investama

-0.7

Correlation Coefficient

Lippo Karawaci  Mnc Investama

Excellent diversification

The 3 months correlation between Lippo and Mnc is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lippo Karawaci Tbk and Mnc Investama Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mnc Investama 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 Mnc Investama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mnc Investama Tbk has no effect on the direction of Lippo Karawaci i.e., Lippo Karawaci and Mnc Investama go up and down completely randomly.

Pair Corralation between Lippo Karawaci and Mnc Investama

Assuming the 90 days trading horizon Lippo Karawaci Tbk is expected to generate 0.88 times more return on investment than Mnc Investama. However, Lippo Karawaci Tbk is 1.13 times less risky than Mnc Investama. It trades about 0.11 of its potential returns per unit of risk. Mnc Investama Tbk is currently generating about 0.01 per unit of risk. If you would invest  6,800  in Lippo Karawaci Tbk on September 1, 2024 and sell it today you would earn a total of  3,900  from holding Lippo Karawaci Tbk or generate 57.35% return on investment over 90 days.

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

Lippo Karawaci Tbk  vs.  Mnc Investama 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.

Mnc Investama Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mnc Investama Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Lippo Karawaci and Mnc Investama

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

The idea behind Lippo Karawaci Tbk and Mnc Investama 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .