Correlation Between Maha Properti and Rockfields Property

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

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

Diversification Opportunities for Maha Properti and Rockfields Property

-0.33

Correlation Coefficient

Maha Properti  Rockfields Property

Very good diversification

The 3 months correlation between Maha and Rockfields is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Maha Properti Indonesia and Rockfields Property Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockfields Property and Maha Properti 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 Maha Properti Indonesia 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 Maha Properti i.e., Maha Properti and Rockfields Property go up and down completely randomly.

Pair Corralation between Maha Properti and Rockfields Property

Assuming the 90 days trading horizon Maha Properti Indonesia is expected to generate 3.83 times more return on investment than Rockfields Property. However, Maha Properti is 3.83 times more volatile than Rockfields Property Indonesia. It trades about 0.05 of its potential returns per unit of risk. Rockfields Property Indonesia is currently generating about -0.15 per unit of risk. If you would invest  161,000  in Maha Properti Indonesia on October 12, 2024 and sell it today you would earn a total of  40,000  from holding Maha Properti Indonesia or generate 24.84% return on investment over 90 days.

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

Maha Properti Indonesia  vs.  Rockfields Property Indonesia

Maha Properti Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Maha Properti and Rockfields Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maha Properti 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 Maha Properti Indonesia 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.