Correlation Between China Overseas and China Overseas
Can any of the company-specific risk be diversified away by investing in both China Overseas 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 China Overseas and China Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Overseas Land and China Overseas Land, you can compare the effects of market volatilities on China Overseas 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 China Overseas with a short position of China Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Overseas and China Overseas.
Diversification Opportunities for China Overseas and China Overseas
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and China is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding China Overseas Land 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 China Overseas 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 China Overseas Land 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 China Overseas i.e., China Overseas and China Overseas go up and down completely randomly.
Pair Corralation between China Overseas and China Overseas
Assuming the 90 days horizon China Overseas Land is expected to under-perform the China Overseas. In addition to that, China Overseas is 1.07 times more volatile than China Overseas Land. It trades about -0.28 of its total potential returns per unit of risk. China Overseas Land is currently generating about -0.15 per unit of volatility. If you would invest 964.00 in China Overseas Land on August 30, 2024 and sell it today you would lose (105.00) from holding China Overseas Land or give up 10.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Overseas Land vs. China Overseas Land
Performance |
| Timeline |
| China Overseas Land |
| China Overseas Land |
China Overseas and China Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Overseas and China Overseas
The main advantage of trading using opposite China Overseas and China Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Overseas 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.| China Overseas vs. Sun Hung Kai | China Overseas vs. China Overseas Land | China Overseas vs. EGRNF | China Overseas vs. Sino Land Co |
| China Overseas vs. Longfor Group Holdings | China Overseas vs. Sun Hung Kai | China Overseas vs. Country Garden Holdings | 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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