Correlation Between Jaya Sukses and Modernland Realty

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

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

Diversification Opportunities for Jaya Sukses and Modernland Realty

0.4

Correlation Coefficient

Jaya Sukses  Modernland Realty

Very weak diversification

The 3 months correlation between Jaya and Modernland is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Jaya Sukses Makmur and Modernland Realty Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modernland Realty and Jaya Sukses 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 Jaya Sukses Makmur are associated (or correlated) with Modernland Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modernland Realty has no effect on the direction of Jaya Sukses i.e., Jaya Sukses and Modernland Realty go up and down completely randomly.

Pair Corralation between Jaya Sukses and Modernland Realty

Assuming the 90 days trading horizon Jaya Sukses Makmur is expected to under-perform the Modernland Realty. But the stock apears to be less risky and, when comparing its historical volatility, Jaya Sukses Makmur is 1.77 times less risky than Modernland Realty. The stock trades about -0.1 of its potential returns per unit of risk. The Modernland Realty Ltd is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,000  in Modernland Realty Ltd on December 23, 2024 and sell it today you would earn a total of  0.00  from holding Modernland Realty Ltd or generate 0.0% return on investment over 90 days.

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

Jaya Sukses Makmur  vs.  Modernland Realty Ltd

Jaya Sukses Makmur

Risk-Adjusted Performance

Very Weak

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

Modernland Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Modernland Realty Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Modernland Realty 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 Jaya Sukses and Modernland Realty

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

The idea behind Jaya Sukses Makmur and Modernland Realty Ltd 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.