Correlation Between Analog Devices and Country Garden
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Country Garden 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 Analog Devices and Country Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Country Garden Holdings, you can compare the effects of market volatilities on Analog Devices and Country Garden 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 Analog Devices with a short position of Country Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Country Garden.
Diversification Opportunities for Analog Devices and Country Garden
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Analog and Country is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Country Garden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Garden Holdings and Analog Devices 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 Analog Devices are associated (or correlated) with Country Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Garden Holdings has no effect on the direction of Analog Devices i.e., Analog Devices and Country Garden go up and down completely randomly.
Pair Corralation between Analog Devices and Country Garden
Considering the 90-day investment horizon Analog Devices is expected to under-perform the Country Garden. But the stock apears to be less risky and, when comparing its historical volatility, Analog Devices is 25.04 times less risky than Country Garden. The stock trades about -0.01 of its potential returns per unit of risk. The Country Garden Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Country Garden Holdings on September 12, 2024 and sell it today you would lose (2.00) from holding Country Garden Holdings or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Country Garden Holdings
Performance |
| Timeline |
| Analog Devices |
| Country Garden Holdings |
Analog Devices and Country Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Country Garden
The main advantage of trading using opposite Analog Devices and Country Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Country Garden 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 Country Garden will offset losses from the drop in Country Garden's long position.| Analog Devices vs. ON Semiconductor | Analog Devices vs. Monolithic Power Systems | Analog Devices vs. Globalfoundries | Analog Devices vs. Wisekey International Holding |
| Country Garden vs. Park Electrochemical | Country Garden vs. The Mosaic | Country Garden vs. Lululemon Athletica | Country Garden vs. The Gap, |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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