Correlation Between Mapletree Industrial and Yara International

Can any of the company-specific risk be diversified away by investing in both Mapletree Industrial and Yara International 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 Mapletree Industrial and Yara International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mapletree Industrial Trust and Yara International ASA, you can compare the effects of market volatilities on Mapletree Industrial and Yara International 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 Mapletree Industrial with a short position of Yara International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mapletree Industrial and Yara International.

Diversification Opportunities for Mapletree Industrial and Yara International

0.85

Correlation Coefficient

Mapletree Industrial  Yara International

Very poor diversification

The 3 months correlation between Mapletree and Yara is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mapletree Industrial Trust and Yara International ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yara International ASA and Mapletree Industrial 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 Mapletree Industrial Trust are associated (or correlated) with Yara International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yara International ASA has no effect on the direction of Mapletree Industrial i.e., Mapletree Industrial and Yara International go up and down completely randomly.

Pair Corralation between Mapletree Industrial and Yara International

Assuming the 90 days horizon Mapletree Industrial Trust is expected to generate 0.71 times more return on investment than Yara International. However, Mapletree Industrial Trust is 1.4 times less risky than Yara International. It trades about -0.12 of its potential returns per unit of risk. Yara International ASA is currently generating about -0.17 per unit of risk. If you would invest  167.00  in Mapletree Industrial Trust on September 13, 2024 and sell it today you would lose (15.00) from holding Mapletree Industrial Trust or give up 8.98% of portfolio value over 90 days.

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

Mapletree Industrial Trust  vs.  Yara International ASA

Mapletree Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mapletree Industrial Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Yara International ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yara International ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Mapletree Industrial and Yara International

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

The idea behind Mapletree Industrial Trust and Yara International ASA 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.