Correlation Between Madison Pacific and Genesis Land

Can any of the company-specific risk be diversified away by investing in both Madison Pacific and Genesis Land 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 Madison Pacific and Genesis Land into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Madison Pacific Properties and Genesis Land Development, you can compare the effects of market volatilities on Madison Pacific and Genesis Land 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 Madison Pacific with a short position of Genesis Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Pacific and Genesis Land.

Diversification Opportunities for Madison Pacific and Genesis Land

0.11

Correlation Coefficient

Madison Pacific  Genesis Land

Average diversification

The 3 months correlation between Madison and Genesis is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Madison Pacific Properties and Genesis Land Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Land Development and Madison Pacific 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 Madison Pacific Properties are associated (or correlated) with Genesis Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Land Development has no effect on the direction of Madison Pacific i.e., Madison Pacific and Genesis Land go up and down completely randomly.

Pair Corralation between Madison Pacific and Genesis Land

Assuming the 90 days trading horizon Madison Pacific Properties is expected to generate 1.08 times more return on investment than Genesis Land. However, Madison Pacific is 1.08 times more volatile than Genesis Land Development. It trades about 0.06 of its potential returns per unit of risk. Genesis Land Development is currently generating about 0.01 per unit of risk. If you would invest  505.00  in Madison Pacific Properties on August 31, 2024 and sell it today you would earn a total of  35.00  from holding Madison Pacific Properties or generate 6.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Madison Pacific Properties  vs.  Genesis Land Development

Madison Pacific Prop

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Madison Pacific Properties are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Madison Pacific may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Genesis Land Development

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genesis Land Development are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Genesis Land is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Madison Pacific and Genesis Land

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

The idea behind Madison Pacific Properties and Genesis Land Development 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.