Correlation Between Lautan Luas and Modernland Realty
Can any of the company-specific risk be diversified away by investing in both Lautan Luas 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 Lautan Luas and Modernland Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lautan Luas Tbk and Modernland Realty Ltd, you can compare the effects of market volatilities on Lautan Luas 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 Lautan Luas with a short position of Modernland Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lautan Luas and Modernland Realty.
Diversification Opportunities for Lautan Luas and Modernland Realty
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lautan and Modernland is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lautan Luas Tbk and Modernland Realty Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modernland Realty and Lautan Luas 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 Lautan Luas Tbk 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 Lautan Luas i.e., Lautan Luas and Modernland Realty go up and down completely randomly.
Pair Corralation between Lautan Luas and Modernland Realty
Assuming the 90 days trading horizon Lautan Luas Tbk is expected to under-perform the Modernland Realty. But the stock apears to be less risky and, when comparing its historical volatility, Lautan Luas Tbk is 1.75 times less risky than Modernland Realty. The stock trades about 0.0 of its potential returns per unit of risk. The Modernland Realty Ltd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5,000 in Modernland Realty Ltd on August 28, 2024 and sell it today you would earn a total of 300.00 from holding Modernland Realty Ltd or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lautan Luas Tbk vs. Modernland Realty Ltd
Performance |
| Timeline |
| Lautan Luas Tbk |
| Modernland Realty |
Lautan Luas and Modernland Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lautan Luas and Modernland Realty
The main advantage of trading using opposite Lautan Luas and Modernland Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lautan Luas 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.| Lautan Luas vs. Kedaung Indah Can | Lautan Luas vs. Langgeng Makmur Industri | Lautan Luas vs. Kabelindo Murni Tbk | Lautan Luas vs. Mustika Ratu Tbk |
| Modernland Realty vs. Kawasan Industri Jababeka | Modernland Realty vs. Lippo Cikarang Tbk | Modernland Realty vs. Sentul City Tbk | Modernland Realty vs. Lippo Karawaci Tbk |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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