Correlation Between New Residential and CHINA VANKE
Can any of the company-specific risk be diversified away by investing in both New Residential and CHINA VANKE 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 New Residential and CHINA VANKE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Residential Investment and CHINA VANKE TD, you can compare the effects of market volatilities on New Residential and CHINA VANKE 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 New Residential with a short position of CHINA VANKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and CHINA VANKE.
Diversification Opportunities for New Residential and CHINA VANKE
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and CHINA is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and CHINA VANKE TD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA VANKE TD and New Residential 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 New Residential Investment are associated (or correlated) with CHINA VANKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA VANKE TD has no effect on the direction of New Residential i.e., New Residential and CHINA VANKE go up and down completely randomly.
Pair Corralation between New Residential and CHINA VANKE
Assuming the 90 days trading horizon New Residential is expected to generate 36.05 times less return on investment than CHINA VANKE. But when comparing it to its historical volatility, New Residential Investment is 9.24 times less risky than CHINA VANKE. It trades about 0.03 of its potential returns per unit of risk. CHINA VANKE TD is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 45.00 in CHINA VANKE TD on September 2, 2024 and sell it today you would earn a total of 32.00 from holding CHINA VANKE TD or generate 71.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. CHINA VANKE TD
Performance |
| Timeline |
| New Residential Inve |
| CHINA VANKE TD |
New Residential and CHINA VANKE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and CHINA VANKE
The main advantage of trading using opposite New Residential and CHINA VANKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, CHINA VANKE 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 CHINA VANKE will offset losses from the drop in CHINA VANKE's long position.| New Residential vs. The Bank of | New Residential vs. Allianz SE | New Residential vs. Sixt SE | New Residential vs. China Construction Bank |
| CHINA VANKE vs. TRADEGATE | CHINA VANKE vs. Carsales | CHINA VANKE vs. DiamondRock Hospitality | CHINA VANKE vs. CARSALESCOM |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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