Correlation Between Lenox Pasifik and Lippo General

Can any of the company-specific risk be diversified away by investing in both Lenox Pasifik and Lippo General 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 Lippo General 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 Lippo General Insurance, you can compare the effects of market volatilities on Lenox Pasifik and Lippo General 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 Lippo General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenox Pasifik and Lippo General.

Diversification Opportunities for Lenox Pasifik and Lippo General

-0.23

Correlation Coefficient

Lenox Pasifik  Lippo General

Very good diversification

The 3 months correlation between Lenox and Lippo is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lenox Pasifik Investama and Lippo General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lippo General Insurance 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 Lippo General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lippo General Insurance has no effect on the direction of Lenox Pasifik i.e., Lenox Pasifik and Lippo General go up and down completely randomly.

Pair Corralation between Lenox Pasifik and Lippo General

Assuming the 90 days trading horizon Lenox Pasifik Investama is expected to under-perform the Lippo General. In addition to that, Lenox Pasifik is 4.58 times more volatile than Lippo General Insurance. It trades about -0.2 of its total potential returns per unit of risk. Lippo General Insurance is currently generating about -0.03 per unit of volatility. If you would invest  36,000  in Lippo General Insurance on September 12, 2024 and sell it today you would lose (200.00) from holding Lippo General Insurance or give up 0.56% of portfolio value over 90 days.

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

Lenox Pasifik Investama  vs.  Lippo General Insurance

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.

Lippo General Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lippo General Insurance 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Lenox Pasifik and Lippo General

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

The idea behind Lenox Pasifik Investama and Lippo General Insurance 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.