Correlation Between Lenox Pasifik and Malacca Trust

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

By analyzing existing cross correlation between Lenox Pasifik Investama and Malacca Trust Wuwungan, you can compare the effects of market volatilities on Lenox Pasifik and Malacca Trust 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 Lenox Pasifik with a short position of Malacca Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenox Pasifik and Malacca Trust.

Diversification Opportunities for Lenox Pasifik and Malacca Trust

-0.12

Correlation Coefficient

Lenox Pasifik  Malacca Trust

Good diversification

The 3 months correlation between Lenox and Malacca is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lenox Pasifik Investama and Malacca Trust Wuwungan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malacca Trust Wuwungan and Lenox Pasifik 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 Lenox Pasifik Investama are associated (or correlated) with Malacca Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malacca Trust Wuwungan has no effect on the direction of Lenox Pasifik i.e., Lenox Pasifik and Malacca Trust go up and down completely randomly.

Pair Corralation between Lenox Pasifik and Malacca Trust

Assuming the 90 days trading horizon Lenox Pasifik is expected to generate 15.65 times less return on investment than Malacca Trust. In addition to that, Lenox Pasifik is 1.25 times more volatile than Malacca Trust Wuwungan. It trades about 0.01 of its total potential returns per unit of risk. Malacca Trust Wuwungan is currently generating about 0.13 per unit of volatility. If you would invest  7,300  in Malacca Trust Wuwungan on October 12, 2024 and sell it today you would earn a total of  8,200  from holding Malacca Trust Wuwungan or generate 112.33% return on investment over 90 days.

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

Lenox Pasifik Investama  vs.  Malacca Trust Wuwungan

Lenox Pasifik Investama

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lenox Pasifik Investama are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Lenox Pasifik disclosed solid returns over the last few months and may actually be approaching a breakup point.

Malacca Trust Wuwungan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Malacca Trust Wuwungan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Malacca Trust 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 Lenox Pasifik and Malacca Trust

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

The idea behind Lenox Pasifik Investama and Malacca Trust Wuwungan 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.