Correlation Between Grand House and Rockfields Property

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

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

Diversification Opportunities for Grand House and Rockfields Property

-0.9

Correlation Coefficient

Grand House  Rockfields Property

Pay attention - limited upside

The 3 months correlation between Grand and Rockfields is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Grand House Mulia and Rockfields Property Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockfields Property and Grand House 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 Grand House Mulia 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 Grand House i.e., Grand House and Rockfields Property go up and down completely randomly.

Pair Corralation between Grand House and Rockfields Property

Assuming the 90 days trading horizon Grand House Mulia is expected to generate 31.67 times more return on investment than Rockfields Property. However, Grand House is 31.67 times more volatile than Rockfields Property Indonesia. It trades about 0.01 of its potential returns per unit of risk. Rockfields Property Indonesia is currently generating about 0.24 per unit of risk. If you would invest  36,600  in Grand House Mulia on October 12, 2024 and sell it today you would lose (600.00) from holding Grand House Mulia or give up 1.64% of portfolio value over 90 days.

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

Grand House Mulia  vs.  Rockfields Property Indonesia

Grand House Mulia

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grand House Mulia are ranked lower than 15 (%) 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.

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 Grand House and Rockfields Property

The main advantage of trading using opposite Grand House and Rockfields Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand House 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 Grand House Mulia 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.