Correlation Between PT Lippo and Carefree

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

Diversification Opportunities for PT Lippo and Carefree

1.0

Correlation Coefficient

PT Lippo  Carefree

No risk reduction

The 3 months correlation between PTLKF and Carefree is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding PT Lippo Karawaci and Carefree Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carefree Group 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 Carefree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carefree Group has no effect on the direction of PT Lippo i.e., PT Lippo and Carefree go up and down completely randomly.

Pair Corralation between PT Lippo and Carefree

If you would invest  1.50  in Carefree Group on September 25, 2024 and sell it today you would earn a total of  0.00  from holding Carefree Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	90.91%
Values	Daily Returns

PT Lippo Karawaci  vs.  Carefree Group

PT Lippo Karawaci

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Lippo Karawaci has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, PT Lippo is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Carefree Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carefree Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Carefree is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PT Lippo and Carefree

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

The idea behind PT Lippo Karawaci and Carefree Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.