Correlation Between Ascendas India and Modiv

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

By analyzing existing cross correlation between Ascendas India Trust and Modiv Inc, you can compare the effects of market volatilities on Ascendas India and Modiv 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 Ascendas India with a short position of Modiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ascendas India and Modiv.

Diversification Opportunities for Ascendas India and Modiv

0.74

Correlation Coefficient

Ascendas India  Modiv

Poor diversification

The 3 months correlation between Ascendas and Modiv is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ascendas India Trust and Modiv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modiv Inc and Ascendas India 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 Ascendas India Trust are associated (or correlated) with Modiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modiv Inc has no effect on the direction of Ascendas India i.e., Ascendas India and Modiv go up and down completely randomly.

Pair Corralation between Ascendas India and Modiv

Assuming the 90 days horizon Ascendas India is expected to generate 1.34 times less return on investment than Modiv. In addition to that, Ascendas India is 1.69 times more volatile than Modiv Inc. It trades about 0.03 of its total potential returns per unit of risk. Modiv Inc is currently generating about 0.07 per unit of volatility. If you would invest  827.00  in Modiv Inc on August 2, 2024 and sell it today you would earn a total of  887.00  from holding Modiv Inc or generate 107.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	84.41%
Values	Daily Returns

Ascendas India Trust  vs.  Modiv Inc

Ascendas India Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ascendas India Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Ascendas India may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Modiv Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Modiv Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Modiv showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ascendas India and Modiv

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

The idea behind Ascendas India Trust and Modiv Inc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.