Correlation Between Lippo Malls and Chevron

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

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

Diversification Opportunities for Lippo Malls and Chevron

0.39

Correlation Coefficient

Lippo Malls  Chevron

Weak diversification

The 3 months correlation between Lippo and Chevron is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Lippo Malls Indonesia and Chevron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron and Lippo Malls 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 Lippo Malls Indonesia are associated (or correlated) with Chevron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron has no effect on the direction of Lippo Malls i.e., Lippo Malls and Chevron go up and down completely randomly.

Pair Corralation between Lippo Malls and Chevron

Assuming the 90 days horizon Lippo Malls Indonesia is expected to generate 2.98 times more return on investment than Chevron. However, Lippo Malls is 2.98 times more volatile than Chevron. It trades about 0.04 of its potential returns per unit of risk. Chevron is currently generating about 0.08 per unit of risk. If you would invest  0.81  in Lippo Malls Indonesia on April 24, 2025 and sell it today you would earn a total of  0.05  from holding Lippo Malls Indonesia or generate 6.17% return on investment over 90 days.

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

Lippo Malls Indonesia  vs.  Chevron

Lippo Malls Indonesia

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lippo Malls Indonesia are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Lippo Malls may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Chevron

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Chevron may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Lippo Malls and Chevron

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

The idea behind Lippo Malls Indonesia and Chevron 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.