Correlation Between Urban Jakarta and Pollux Properti

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

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

Diversification Opportunities for Urban Jakarta and Pollux Properti

0.0

Correlation Coefficient

Urban Jakarta  Pollux Properti

Pay attention - limited upside

The 3 months correlation between Urban and Pollux is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Urban Jakarta Propertindo and Pollux Properti Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pollux Properti Indonesia and Urban Jakarta 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 Urban Jakarta Propertindo are associated (or correlated) with Pollux Properti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pollux Properti Indonesia has no effect on the direction of Urban Jakarta i.e., Urban Jakarta and Pollux Properti go up and down completely randomly.

Pair Corralation between Urban Jakarta and Pollux Properti

Assuming the 90 days trading horizon Urban Jakarta Propertindo is expected to generate 2.4 times more return on investment than Pollux Properti. However, Urban Jakarta is 2.4 times more volatile than Pollux Properti Indonesia. It trades about 0.01 of its potential returns per unit of risk. Pollux Properti Indonesia is currently generating about -0.06 per unit of risk. If you would invest  14,900  in Urban Jakarta Propertindo on September 8, 2024 and sell it today you would lose (1,600) from holding Urban Jakarta Propertindo or give up 10.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.54%
Values	Daily Returns

Urban Jakarta Propertindo  vs.  Pollux Properti Indonesia

Urban Jakarta Propertindo

Risk-Adjusted Performance

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Very Weak

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

Pollux Properti Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pollux Properti Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Pollux Properti 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 Urban Jakarta and Pollux Properti

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

The idea behind Urban Jakarta Propertindo and Pollux Properti 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.