Correlation Between PT Lippo and Ambase Corp

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

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

Diversification Opportunities for PT Lippo and Ambase Corp

-0.53

Correlation Coefficient

PT Lippo  Ambase Corp

Excellent diversification

The 3 months correlation between PTLKF and Ambase is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding PT Lippo Karawaci and Ambase Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambase Corp and PT Lippo 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 PT Lippo Karawaci are associated (or correlated) with Ambase Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambase Corp has no effect on the direction of PT Lippo i.e., PT Lippo and Ambase Corp go up and down completely randomly.

Pair Corralation between PT Lippo and Ambase Corp

Assuming the 90 days horizon PT Lippo Karawaci is expected to generate 0.42 times more return on investment than Ambase Corp. However, PT Lippo Karawaci is 2.36 times less risky than Ambase Corp. It trades about 0.13 of its potential returns per unit of risk. Ambase Corp is currently generating about 0.0 per unit of risk. If you would invest  0.90  in PT Lippo Karawaci on December 27, 2024 and sell it today you would earn a total of  0.10  from holding PT Lippo Karawaci or generate 11.11% return on investment over 90 days.

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

PT Lippo Karawaci  vs.  Ambase Corp

PT Lippo Karawaci

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Lippo Karawaci are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, PT Lippo may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ambase Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ambase Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Ambase Corp is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with PT Lippo and Ambase Corp

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

The idea behind PT Lippo Karawaci and Ambase Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.