Correlation Between Metropolitan Kentjana and Intiland Development
Can any of the company-specific risk be diversified away by investing in both Metropolitan Kentjana and Intiland Development 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 Metropolitan Kentjana and Intiland Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan Kentjana Tbk and Intiland Development Tbk, you can compare the effects of market volatilities on Metropolitan Kentjana and Intiland Development 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 Metropolitan Kentjana with a short position of Intiland Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Kentjana and Intiland Development.
Diversification Opportunities for Metropolitan Kentjana and Intiland Development
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metropolitan and Intiland is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Kentjana Tbk and Intiland Development Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intiland Development Tbk and Metropolitan Kentjana 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 Metropolitan Kentjana Tbk are associated (or correlated) with Intiland Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intiland Development Tbk has no effect on the direction of Metropolitan Kentjana i.e., Metropolitan Kentjana and Intiland Development go up and down completely randomly.
Pair Corralation between Metropolitan Kentjana and Intiland Development
Assuming the 90 days trading horizon Metropolitan Kentjana Tbk is expected to generate 0.5 times more return on investment than Intiland Development. However, Metropolitan Kentjana Tbk is 2.01 times less risky than Intiland Development. It trades about -0.06 of its potential returns per unit of risk. Intiland Development Tbk is currently generating about -0.09 per unit of risk. If you would invest 2,700,000 in Metropolitan Kentjana Tbk on September 2, 2024 and sell it today you would lose (105,000) from holding Metropolitan Kentjana Tbk or give up 3.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan Kentjana Tbk vs. Intiland Development Tbk
Performance |
| Timeline |
| Metropolitan Kentjana Tbk |
| Intiland Development Tbk |
Metropolitan Kentjana and Intiland Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan Kentjana and Intiland Development
The main advantage of trading using opposite Metropolitan Kentjana and Intiland Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan Kentjana position performs unexpectedly, Intiland Development 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 Intiland Development will offset losses from the drop in Intiland Development's long position.| Metropolitan Kentjana vs. Lippo Cikarang Tbk | Metropolitan Kentjana vs. Lippo Karawaci Tbk | Metropolitan Kentjana vs. Mitra Pinasthika Mustika | Metropolitan Kentjana vs. Jakarta Int Hotels |
| Intiland Development vs. Sentul City Tbk | Intiland Development vs. Modernland Realty Ltd | Intiland Development vs. Kawasan Industri Jababeka | Intiland Development vs. Ciputra Development 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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