Correlation Between Mapletree Industrial and SEGRO Plc

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

By analyzing existing cross correlation between Mapletree Industrial Trust and SEGRO Plc, you can compare the effects of market volatilities on Mapletree Industrial and SEGRO Plc 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 Mapletree Industrial with a short position of SEGRO Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mapletree Industrial and SEGRO Plc.

Diversification Opportunities for Mapletree Industrial and SEGRO Plc

-0.19

Correlation Coefficient

Mapletree Industrial  SEGRO Plc

Good diversification

The 3 months correlation between Mapletree and SEGRO is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Mapletree Industrial Trust and SEGRO Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEGRO Plc and Mapletree Industrial 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 Mapletree Industrial Trust are associated (or correlated) with SEGRO Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEGRO Plc has no effect on the direction of Mapletree Industrial i.e., Mapletree Industrial and SEGRO Plc go up and down completely randomly.

Pair Corralation between Mapletree Industrial and SEGRO Plc

Assuming the 90 days horizon Mapletree Industrial Trust is expected to under-perform the SEGRO Plc. In addition to that, Mapletree Industrial is 1.72 times more volatile than SEGRO Plc. It trades about -0.02 of its total potential returns per unit of risk. SEGRO Plc is currently generating about 0.02 per unit of volatility. If you would invest  796.00  in SEGRO Plc on December 30, 2024 and sell it today you would earn a total of  14.00  from holding SEGRO Plc or generate 1.76% return on investment over 90 days.

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

Mapletree Industrial Trust  vs.  SEGRO Plc

Mapletree Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mapletree Industrial Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Mapletree Industrial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

SEGRO Plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SEGRO Plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SEGRO Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mapletree Industrial and SEGRO Plc

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

The idea behind Mapletree Industrial Trust and SEGRO Plc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.