Correlation Between PT Kalbe and Eli Lilly

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

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

Diversification Opportunities for PT Kalbe and Eli Lilly

-0.28

Correlation Coefficient

PT Kalbe  Eli Lilly

Very good diversification

The 3 months correlation between PTKFF and Eli is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding PT Kalbe Farma and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and PT Kalbe 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 Kalbe Farma are associated (or correlated) with Eli Lilly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eli Lilly has no effect on the direction of PT Kalbe i.e., PT Kalbe and Eli Lilly go up and down completely randomly.

Pair Corralation between PT Kalbe and Eli Lilly

Assuming the 90 days horizon PT Kalbe Farma is expected to generate 0.31 times more return on investment than Eli Lilly. However, PT Kalbe Farma is 3.21 times less risky than Eli Lilly. It trades about 0.21 of its potential returns per unit of risk. Eli Lilly and is currently generating about -0.11 per unit of risk. If you would invest  9.00  in PT Kalbe Farma on February 3, 2024 and sell it today you would earn a total of  0.26  from holding PT Kalbe Farma or generate 2.89% return on investment over 90 days.

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

PT Kalbe Farma  vs.  Eli Lilly and

PT Kalbe Farma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Kalbe Farma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Eli Lilly

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eli Lilly and are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Eli Lilly may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with PT Kalbe and Eli Lilly

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

The idea behind PT Kalbe Farma and Eli Lilly and 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.