Correlation Between Brookfield Infrastructure and China Overseas
Can any of the company-specific risk be diversified away by investing in both Brookfield Infrastructure and China Overseas 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 Brookfield Infrastructure and China Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Infrastructure Partners and China Overseas Land, you can compare the effects of market volatilities on Brookfield Infrastructure and China Overseas 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 Brookfield Infrastructure with a short position of China Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Infrastructure and China Overseas.
Diversification Opportunities for Brookfield Infrastructure and China Overseas
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brookfield and China is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Infrastructure Part and China Overseas Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Overseas Land and Brookfield Infrastructure 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 Brookfield Infrastructure Partners are associated (or correlated) with China Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Overseas Land has no effect on the direction of Brookfield Infrastructure i.e., Brookfield Infrastructure and China Overseas go up and down completely randomly.
Pair Corralation between Brookfield Infrastructure and China Overseas
Considering the 90-day investment horizon Brookfield Infrastructure is expected to generate 2.34 times less return on investment than China Overseas. But when comparing it to its historical volatility, Brookfield Infrastructure Partners is 2.93 times less risky than China Overseas. It trades about 0.02 of its potential returns per unit of risk. China Overseas Land is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 251.00 in China Overseas Land on August 24, 2024 and sell it today you would lose (79.00) from holding China Overseas Land or give up 31.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.31% |
| Values | Daily Returns |
Brookfield Infrastructure Part vs. China Overseas Land
Performance |
| Timeline |
| Brookfield Infrastructure |
| China Overseas Land |
Brookfield Infrastructure and China Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Infrastructure and China Overseas
The main advantage of trading using opposite Brookfield Infrastructure and China Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Infrastructure position performs unexpectedly, China Overseas 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 Overseas will offset losses from the drop in China Overseas' long position.| Brookfield Infrastructure vs. Allete Inc | Brookfield Infrastructure vs. Avista | Brookfield Infrastructure vs. NorthWestern | Brookfield Infrastructure vs. The AES |
| China Overseas vs. Sun Hung Kai | China Overseas vs. China Overseas Land | China Overseas vs. EGRNF | China Overseas vs. Sino Land Co |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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