Correlation Between Lima Dua and PT Indo

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

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

Diversification Opportunities for Lima Dua and PT Indo

-0.8

Correlation Coefficient

Lima Dua  PT Indo

Pay attention - limited upside

The 3 months correlation between Lima and IBOS is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lima Dua Lima and PT Indo Boga in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indo Boga and Lima Dua 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 Lima Dua Lima are associated (or correlated) with PT Indo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indo Boga has no effect on the direction of Lima Dua i.e., Lima Dua and PT Indo go up and down completely randomly.

Pair Corralation between Lima Dua and PT Indo

Assuming the 90 days trading horizon Lima Dua Lima is expected to generate 0.54 times more return on investment than PT Indo. However, Lima Dua Lima is 1.84 times less risky than PT Indo. It trades about 0.03 of its potential returns per unit of risk. PT Indo Boga is currently generating about -0.11 per unit of risk. If you would invest  12,700  in Lima Dua Lima on October 10, 2024 and sell it today you would earn a total of  900.00  from holding Lima Dua Lima or generate 7.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.19%
Values	Daily Returns

Lima Dua Lima  vs.  PT Indo Boga

Lima Dua Lima

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lima Dua Lima are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Lima Dua disclosed solid returns over the last few months and may actually be approaching a breakup point.

PT Indo Boga

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Indo Boga 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Lima Dua and PT Indo

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

The idea behind Lima Dua Lima and PT Indo Boga 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.