Correlation Between Intiland Development and Rockfields Property

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

Diversification Opportunities for Intiland Development and Rockfields Property

0.62

Correlation Coefficient

Intiland Development  Rockfields Property

Poor diversification

The 3 months correlation between Intiland and Rockfields is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Intiland Development Tbk and Rockfields Property Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockfields Property 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 Rockfields Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockfields Property has no effect on the direction of Intiland Development i.e., Intiland Development and Rockfields Property go up and down completely randomly.

Pair Corralation between Intiland Development and Rockfields Property

Assuming the 90 days trading horizon Intiland Development Tbk is expected to under-perform the Rockfields Property. In addition to that, Intiland Development is 7.14 times more volatile than Rockfields Property Indonesia. It trades about -0.28 of its total potential returns per unit of risk. Rockfields Property Indonesia is currently generating about -0.06 per unit of volatility. If you would invest  28,200  in Rockfields Property Indonesia on October 12, 2024 and sell it today you would lose (200.00) from holding Rockfields Property Indonesia or give up 0.71% of portfolio value over 90 days.

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

Intiland Development Tbk  vs.  Rockfields Property Indonesia

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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Rockfields Property

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rockfields Property Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Rockfields Property is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Intiland Development and Rockfields Property

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

The idea behind Intiland Development Tbk and Rockfields Property 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.