Correlation Between China Overseas and Country Garden
Can any of the company-specific risk be diversified away by investing in both China Overseas 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 China Overseas and Country Garden 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 Country Garden Holdings, you can compare the effects of market volatilities on China Overseas 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 China Overseas with a short position of Country Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Overseas and Country Garden.
Diversification Opportunities for China Overseas and Country Garden
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Country is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding China Overseas Land 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 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 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 China Overseas i.e., China Overseas and Country Garden go up and down completely randomly.
Pair Corralation between China Overseas and Country Garden
Assuming the 90 days horizon China Overseas Land is expected to under-perform the Country Garden. In addition to that, China Overseas is 2.58 times more volatile than Country Garden Holdings. It trades about -0.29 of its total potential returns per unit of risk. Country Garden Holdings is currently generating about 0.22 per unit of volatility. If you would invest 17.00 in Country Garden Holdings on September 2, 2024 and sell it today you would earn a total of 1.00 from holding Country Garden Holdings or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Overseas Land vs. Country Garden Holdings
Performance |
| Timeline |
| China Overseas Land |
| Country Garden Holdings |
China Overseas and Country Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Overseas and Country Garden
The main advantage of trading using opposite China Overseas and Country Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Overseas 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.| China Overseas vs. Sun Hung Kai | China Overseas vs. China Overseas Land | China Overseas vs. EGRNF | China Overseas vs. Sino Land Co |
| Country Garden vs. HUMANA INC | Country Garden vs. SCOR PK | Country Garden vs. Aquagold International | Country Garden vs. Thrivent High Yield |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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