Correlation Between Rig Tenders and Lautan Luas

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

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

Diversification Opportunities for Rig Tenders and Lautan Luas

0.74

Correlation Coefficient

Rig Tenders  Lautan Luas

Poor diversification

The 3 months correlation between Rig and Lautan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Rig Tenders Tbk 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 Rig Tenders 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 Rig Tenders Tbk 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 Rig Tenders i.e., Rig Tenders and Lautan Luas go up and down completely randomly.

Pair Corralation between Rig Tenders and Lautan Luas

Assuming the 90 days trading horizon Rig Tenders Tbk is expected to under-perform the Lautan Luas. In addition to that, Rig Tenders is 6.03 times more volatile than Lautan Luas Tbk. It trades about -0.08 of its total potential returns per unit of risk. Lautan Luas Tbk is currently generating about -0.28 per unit of volatility. If you would invest  102,000  in Lautan Luas Tbk on December 29, 2024 and sell it today you would lose (12,000) from holding Lautan Luas Tbk or give up 11.76% of portfolio value over 90 days.

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

Rig Tenders Tbk  vs.  Lautan Luas Tbk

Rig Tenders Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rig Tenders 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.

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 Rig Tenders and Lautan Luas

The main advantage of trading using opposite Rig Tenders and Lautan Luas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rig Tenders 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 Rig Tenders Tbk 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..