Correlation Between Modernland Realty and Kawasan Industri

Can any of the company-specific risk be diversified away by investing in both Modernland Realty and Kawasan Industri 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 Modernland Realty and Kawasan Industri into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Modernland Realty Ltd and Kawasan Industri Jababeka, you can compare the effects of market volatilities on Modernland Realty and Kawasan Industri 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 Modernland Realty with a short position of Kawasan Industri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modernland Realty and Kawasan Industri.

Diversification Opportunities for Modernland Realty and Kawasan Industri

0.41

Correlation Coefficient

Modernland Realty  Kawasan Industri

Very weak diversification

The 3 months correlation between Modernland and Kawasan is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Modernland Realty Ltd and Kawasan Industri Jababeka in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kawasan Industri Jababeka and Modernland Realty 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 Modernland Realty Ltd are associated (or correlated) with Kawasan Industri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kawasan Industri Jababeka has no effect on the direction of Modernland Realty i.e., Modernland Realty and Kawasan Industri go up and down completely randomly.

Pair Corralation between Modernland Realty and Kawasan Industri

Assuming the 90 days trading horizon Modernland Realty is expected to generate 7.38 times less return on investment than Kawasan Industri. In addition to that, Modernland Realty is 1.2 times more volatile than Kawasan Industri Jababeka. It trades about 0.03 of its total potential returns per unit of risk. Kawasan Industri Jababeka is currently generating about 0.22 per unit of volatility. If you would invest  11,800  in Kawasan Industri Jababeka on September 1, 2024 and sell it today you would earn a total of  7,700  from holding Kawasan Industri Jababeka or generate 65.25% return on investment over 90 days.

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

Modernland Realty Ltd  vs.  Kawasan Industri Jababeka

Modernland Realty

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Modernland Realty Ltd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Modernland Realty may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Kawasan Industri Jababeka

Risk-Adjusted Performance

17 of 100

Solid

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

Pair Trading with Modernland Realty and Kawasan Industri

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

The idea behind Modernland Realty Ltd and Kawasan Industri Jababeka 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.