Correlation Between Vulcan Materials and Lippo Malls

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

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

Diversification Opportunities for Vulcan Materials and Lippo Malls

0.44

Correlation Coefficient

Vulcan Materials  Lippo Malls

Very weak diversification

The 3 months correlation between Vulcan and Lippo is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Lippo Malls Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lippo Malls Indonesia and Vulcan Materials 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 Vulcan Materials are associated (or correlated) with Lippo Malls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lippo Malls Indonesia has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Lippo Malls go up and down completely randomly.

Pair Corralation between Vulcan Materials and Lippo Malls

Assuming the 90 days horizon Vulcan Materials is expected to generate 3.01 times less return on investment than Lippo Malls. But when comparing it to its historical volatility, Vulcan Materials is 2.49 times less risky than Lippo Malls. It trades about 0.04 of its potential returns per unit of risk. Lippo Malls Indonesia is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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	Weak
Accuracy	100.0%
Values	Daily Returns

Vulcan Materials  vs.  Lippo Malls Indonesia

Vulcan Materials

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Vulcan Materials is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Vulcan Materials and Lippo Malls

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

The idea behind Vulcan Materials and Lippo Malls Indonesia 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.