Correlation Between Intiland Development and Grand House

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

By analyzing existing cross correlation between Intiland Development Tbk and Grand House Mulia, you can compare the effects of market volatilities on Intiland Development and Grand House 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 Intiland Development with a short position of Grand House. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intiland Development and Grand House.

Diversification Opportunities for Intiland Development and Grand House

-0.63

Correlation Coefficient

Intiland Development  Grand House

Excellent diversification

The 3 months correlation between Intiland and Grand is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Intiland Development Tbk and Grand House Mulia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand House Mulia and Intiland Development 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 Intiland Development Tbk are associated (or correlated) with Grand House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand House Mulia has no effect on the direction of Intiland Development i.e., Intiland Development and Grand House go up and down completely randomly.

Pair Corralation between Intiland Development and Grand House

Assuming the 90 days trading horizon Intiland Development Tbk is expected to under-perform the Grand House. But the stock apears to be less risky and, when comparing its historical volatility, Intiland Development Tbk is 4.39 times less risky than Grand House. The stock trades about -0.09 of its potential returns per unit of risk. The Grand House Mulia is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  13,700  in Grand House Mulia on September 2, 2024 and sell it today you would earn a total of  22,900  from holding Grand House Mulia or generate 167.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Intiland Development Tbk  vs.  Grand House Mulia

Intiland Development Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intiland Development Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Grand House Mulia

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grand House Mulia are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Grand House disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intiland Development and Grand House

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

The idea behind Intiland Development Tbk and Grand House Mulia 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.