Correlation Between Ancora Indonesia and Lautan Luas

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

By analyzing existing cross correlation between Ancora Indonesia Resources and Lautan Luas Tbk, you can compare the effects of market volatilities on Ancora Indonesia and Lautan Luas 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 Ancora Indonesia with a short position of Lautan Luas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ancora Indonesia and Lautan Luas.

Diversification Opportunities for Ancora Indonesia and Lautan Luas

-0.36

Correlation Coefficient

Ancora Indonesia  Lautan Luas

Very good diversification

The 3 months correlation between Ancora and Lautan is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ancora Indonesia Resources and Lautan Luas Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lautan Luas Tbk and Ancora Indonesia 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 Ancora Indonesia Resources are associated (or correlated) with Lautan Luas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lautan Luas Tbk has no effect on the direction of Ancora Indonesia i.e., Ancora Indonesia and Lautan Luas go up and down completely randomly.

Pair Corralation between Ancora Indonesia and Lautan Luas

Assuming the 90 days trading horizon Ancora Indonesia Resources is expected to generate 3.81 times more return on investment than Lautan Luas. However, Ancora Indonesia is 3.81 times more volatile than Lautan Luas Tbk. It trades about 0.09 of its potential returns per unit of risk. Lautan Luas Tbk is currently generating about -0.28 per unit of risk. If you would invest  10,000  in Ancora Indonesia Resources on December 30, 2024 and sell it today you would earn a total of  1,300  from holding Ancora Indonesia Resources or generate 13.0% return on investment over 90 days.

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

Ancora Indonesia Resources  vs.  Lautan Luas Tbk

Ancora Indonesia Res

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ancora Indonesia Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Ancora Indonesia disclosed solid returns over the last few months and may actually be approaching a breakup point.

Lautan Luas Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lautan Luas 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Ancora Indonesia and Lautan Luas

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

The idea behind Ancora Indonesia Resources and Lautan Luas 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.