Correlation Between Bayport International and Longfor Properties
Can any of the company-specific risk be diversified away by investing in both Bayport International and Longfor Properties 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 Bayport International and Longfor Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bayport International Holdings and Longfor Properties Co, you can compare the effects of market volatilities on Bayport International and Longfor Properties 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 Bayport International with a short position of Longfor Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayport International and Longfor Properties.
Diversification Opportunities for Bayport International and Longfor Properties
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bayport and Longfor is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bayport International Holdings and Longfor Properties Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longfor Properties and Bayport International 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 Bayport International Holdings are associated (or correlated) with Longfor Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longfor Properties has no effect on the direction of Bayport International i.e., Bayport International and Longfor Properties go up and down completely randomly.
Pair Corralation between Bayport International and Longfor Properties
Given the investment horizon of 90 days Bayport International Holdings is expected to generate 16.12 times more return on investment than Longfor Properties. However, Bayport International is 16.12 times more volatile than Longfor Properties Co. It trades about 0.07 of its potential returns per unit of risk. Longfor Properties Co is currently generating about -0.01 per unit of risk. If you would invest 0.80 in Bayport International Holdings on November 2, 2024 and sell it today you would lose (0.79) from holding Bayport International Holdings or give up 98.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayport International Holdings vs. Longfor Properties Co
Performance |
| Timeline |
| Bayport International |
| Longfor Properties |
Bayport International and Longfor Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayport International and Longfor Properties
The main advantage of trading using opposite Bayport International and Longfor Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayport International position performs unexpectedly, Longfor Properties 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 Longfor Properties will offset losses from the drop in Longfor Properties' long position.| Bayport International vs. Hong Kong Land | Bayport International vs. Wharf Holdings | Bayport International vs. Holiday Island Holdings | Bayport International vs. Sun Hung Kai |
| Longfor Properties vs. Sun Hung Kai | Longfor Properties vs. Sino Land Co | Longfor Properties vs. Sun Hung Kai | Longfor Properties vs. Holiday Island Holdings |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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