Correlation Between Modernland Realty and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Modernland Realty and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Modernland Realty and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modernland Realty and Dow Jones.
Diversification Opportunities for Modernland Realty and Dow Jones
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Modernland and Dow is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Modernland Realty Ltd and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Modernland Realty i.e., Modernland Realty and Dow Jones go up and down completely randomly.
Pair Corralation between Modernland Realty and Dow Jones
Assuming the 90 days trading horizon Modernland Realty Ltd is expected to generate 2.81 times more return on investment than Dow Jones. However, Modernland Realty is 2.81 times more volatile than Dow Jones Industrial. It trades about -0.05 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.25 per unit of risk. If you would invest 5,100 in Modernland Realty Ltd on November 29, 2024 and sell it today you would lose (100.00) from holding Modernland Realty Ltd or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Modernland Realty Ltd vs. Dow Jones Industrial
Performance |
| Timeline |
Modernland Realty and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Modernland Realty Ltd
Pair trading matchups for Modernland Realty
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Modernland Realty and Dow Jones
The main advantage of trading using opposite Modernland Realty and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modernland Realty position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Modernland Realty vs. Kawasan Industri Jababeka | Modernland Realty vs. Lippo Cikarang Tbk | Modernland Realty vs. Sentul City Tbk | Modernland Realty vs. Lippo Karawaci Tbk |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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